Which of the Following Statements Is True

question 22

Multiple Choice

Which of the following statements is true?

• A) Calculus of variations (CV) adjusts standard deviations to compare the risk of securities with different expected returns.
• B) Risk-averse investors prefer securities with high standard deviations.
• C) An increase in risk will result in an increase in the standard deviation.
• D) Standard deviations can be computed for stock returns, but not for bond yields.
• E) If the returns from a security are normally distributed, 86% of the observations fall within one standard deviation of the expected value.

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Definitions:

Accuracy

The degree to which information, measurement, or calculation is correct and free from errors.

Distortion

The act of misrepresenting or altering information or reality, often to deceive or create a misleading impression.

Meta-Communication

The act of communicating about communication, often used to clarify or interpret the underlying message in an interaction.

Media Richness

A theory that evaluates communication media based on their ability to reproduce the information sent over them without loss or distortion.