While ________ Seems to Be a Reasonable Measure of Risk

question 24

Multiple Choice

While ________ seems to be a reasonable measure of risk when evaluating a large portfolio,the ________ of an individual security does not explain the size of its average return.

• A)volatility,volatility
• B)the mean return,standard deviation
• C)mode,volatility
• D)volatility,compound annual return
• E)volatility,mean return

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Definitions:

Recession

A significant decline in economic activity spread across the economy, lasting more than a few months.

Inflation

The measure of how quickly the general price level of goods and services rises, depleting the ability to purchase.

Market Risk Premium

The supplementary income expected by investors when they choose to invest in a volatile market portfolio rather than in secure, riskless options.

Risk-Free Rate

The return on investment with zero risk, typically represented by yields on government securities.