Which of the Following Pairs of Portfolios Exemplifies the Risk-Return

question 130

Multiple Choice

Which of the following pairs of portfolios exemplifies the risk-return tradeoff?

• A)For Portfolio A, the average return is 6 percent and the standard deviation is 15 percent; for Portfolio B, the average return is 6 percent and the standard deviation is 25 percent.
• B)For Portfolio A, the average return is 5 percent and the standard deviation is 15 percent; for Portfolio B, the average return is 8 percent and the standard deviation is 15 percent.
• C)For Portfolio A, the average return is 5 percent and the standard deviation is 25 percent; for Portfolio B, the average return is 8 percent and the standard deviation is 15 percent.
• D)For Portfolio A, the average return is 5 percent and the standard deviation is 15 percent; for Portfolio B, the average return is 8 percent and the standard deviation is 25 percent.

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Definitions:

Equilibrium Reaction

A chemical reaction in which the rate of the forward reaction equals the rate of the reverse reaction, resulting in no net change in the concentrations of reactants and products.

K

The symbol for Potassium, a chemical element with atomic number 19, highly reactive and essential for plant and animal life.

HAc

A shorthand notation for acetic acid, a colorless liquid organic compound with the chemical formula CH3COOH.

K

Symbol for Potassium, a soft, silvery-white metallic element essential for plant growth and human nutrition.