The Distributions of Rates of Return for Companies AA and BB

question 94

True/False

The distributions of rates of return for Companies AA and BB are given below:
$$\begin{array} { l l l r } \text { State of the } &{ \text { Prabability of } } \\\text { Economy } & \text { This State Occurrine } & \mathrm { AA } & \underline { \mathrm { BB } } \\ \text { Bonm } & 0.2 & 30 \% &-10 \% \\\text { Narmal } & 0.6 & 10 \% & 5 \% \\\text { Recesfion } & 0.2 & - 5 \% & 50 \%\end{array}$$
We can conclude from the above information that any rational, risk-averse investor would be better off adding Security AA to a well-diversified portfolio over Security BB.

---

Definitions:

Monasteries

Religious communities or buildings where monks live, work, and worship, often secluded from the secular world.

Tourist Attractions

Locations that draw visitors by providing culturally rich, entertaining, or historically significant experiences, often contributing to the local economy.

Mid- and Late 1500s

A historical period during the 16th century characterized by significant political, social, and cultural changes in Europe.