A Study Examining the Performance of Numerous Assets from the United

question 12

Multiple Choice

A study examining the performance of numerous assets from the United States and around the world confirms that

• A) riskier assets with higher standard deviations experienced lower returns.
• B) riskier assets with higher standard deviations experienced higher returns.
• C) standard deviation did a better job of explaining the returns than beta.
• D) U.S. equities are highly correlated with world government bonds and with the commodities index.
• E) most assets (including common stocks) have positive correlations with inflation.

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Definitions:

Mean

The arithmetic average of a data set, obtained by adding all the numbers and dividing by the count of numbers.

Normal Random Variable

A variable whose occurrences are distributed according to the normal distribution.

Percentile

A value on a scale of 100 that indicates the percentage of a distribution that is equal to or below it.

Standard Deviation

A quantification of how spread out or dispersed the values in a collection are, measuring the deviation of data points from their average.