You Observe the Following Information Regarding Companies X and Y

question 102

Multiple Choice

You observe the following information regarding Companies X and Y: ∙
Company X has a higher expected return than Company Y.
∙
Company X has a lower standard deviation of returns than Company Y.
∙
Company X has a higher beta than Company Y.
Given this information, which of the following statements is CORRECT?

• A) Company X has a lower coefficient of variation than Company Y.
• B) Company X has less market risk than Company Y.
• C) Company X's returns will be negative when Y's returns are positive.
• D) Company X's stock is a better buy than Company Y's stock.
• E) Company X has more diversifiable risk than Company Y.

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Definitions:

Loan

A sum of money that is borrowed, often from a financial institution, which is expected to be paid back with interest.

Annual Interest Rate

The percentage increase in money that borrowers pay lenders over a year, typically applied to loans and savings.

Interest

The charge for borrowing money or the return for lending money, expressed as a percentage of the loan amount.

Interest Rate

The percentage charged on a loan or paid on savings over a specific period, reflecting the cost of borrowing or the reward for saving.