If Asset A's Return Is Exactly Two Times Asset B's

question 100

Multiple Choice

If asset A's return is exactly two times asset B's return, then following risk return tradeoff, the standard deviation of asset A should be ________ times the standard deviation of asset B.

• A) 3
• B) 2
• C) 1
• D) 4

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Definitions:

Eurobond Agreement

An international bond that is denominated in a currency not native to the country where it is issued, often used by companies and governments to raise capital.

Short-Term

Relating to a brief period of time, typically less than a year.

Covered Interest Arbitrage

A strategy where investors exploit the interest rate differential between two countries while covering exchange rate risk, aiming for guaranteed returns.

Forward Rates

Forward rates are interest rates or foreign exchange rates fixed now for a financial transaction that will occur at a future date.