You Observe the Following Information Regarding Companies X and Y

question 75

Multiple Choice

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

• 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:

Callable Bonds

A type of bond that can be redeemed by the issuer before its maturity date.

Carrying Value

Carrying value is the book value of an asset or liability on a company's balance sheet, calculated as the original cost minus any depreciation, amortization, or impairment costs.

Market Rate

The prevailing price or interest rate available in the marketplace for goods, services, or securities.

Contractual Rate

The agreed-upon interest rate specified in a contract, such as in a loan agreement or bond.