Which One of These Statements Must Be Correct

question 53

Multiple Choice

Which one of these statements must be correct?

• A)Long-term expected rates of return are inversely related to risk premium.
• B)The lower the risk premium the higher a security's average rate of return.
• C)Risk premium is defined as the nominal rate of return minus the rate of inflation.
• D)One security can have both a higher standard deviation and a lower risk premium than another security for the same historical period.
• E)A security with a standard deviation of 9.9 percent for a stated historical period will have a higher average rate of return for that period than a security with a standard deviation of 9.6 percent.

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Definitions:

Parietal Lobes

Regions of the brain located behind the frontal lobes, involved in processing sensory information such as touch, temperature, and body position.

Occipital Lobes

The region of the brain located at the back, responsible for processing visual information received from the eyes.

Sensing Touch

The perception or sensation induced by physical contact with objects or individuals, enabled by the body's sensory receptors.

Limbic System

An intricate network of neural pathways in the brain, responsible for fundamental emotions like pleasure and fear, as well as basic instincts like sexual drive and the need for food.