Two Assets Have the Following Expected Returns and Standard Deviations

question 69

Multiple Choice

Two assets have the following expected returns and standard deviations when the risk-free rate is 5%: An investor with a risk aversion of A = 3 would find that _________________ on a risk return basis.

• A) only Asset A is acceptable
• B) only Asset B is acceptable
• C) neither Asset A nor Asset B is acceptable
• D) both Asset A and Asset B are acceptable

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Definitions:

Realistic Job Preview

An accurate presentation of the potential duties and responsibilities of a job role to candidates, aimed at reducing turnover by setting proper expectations.

Uncertainty Reduction

The process through which individuals, groups, or organizations gather information to decrease the level of uncertainty about future events or behaviors.

Job Satisfaction

The level of contentment or happiness an individual feels towards their job role, considering aspects such as work environment and compensation.

Psychological Contract

An unwritten agreement that exists between an employer and employees, outlining mutual expectations including attitudes, behaviors, and contributions.