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The Figures Below Show Plots of Monthly Excess Returns for Two

question 20

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The figures below show plots of monthly excess returns for two stocks plotted against excess returns for a market index. The figures below show plots of monthly excess returns for two stocks plotted against excess returns for a market index.   -Which stock is likely to further reduce risk for an investor currently holding his portfolio in a well diversified portfolio of common stock? A)  Stock A B)  Stock B C)  There is no difference between A or B D)  You cannot tell from the information given.
-Which stock is likely to further reduce risk for an investor currently holding his portfolio in a well diversified portfolio of common stock?


Definitions:

GDP Deflator

An apparatus for gauging the level of prices of all newly made, domestic final goods and services in an economic setting.

Percentage Change

A mathematical calculation that shows how much a quantity has increased or decreased as a proportion of its previous value, often expressed as a percentage.

National Income

The total value of all goods and services produced by a country's economy over a specific period, including income from abroad, and serving as a measure of economic health.

Indirect Business Taxes

Indirect business taxes are taxes levied on goods and services rather than on income or profits, such as sales tax or value-added tax.

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