Security a Has a Higher Standard Deviation of Returns Than

question 86

Multiple Choice

Security A has a higher standard deviation of returns than security B. We would expect that:
I. Security A would have a risk premium equal to security B.
II. The likely range of returns for security A in any given year would be higher than the likely range of returns for security B.
III. The Sharpe ratio of A will be higher than the Sharpe ratio of B.

• A) I only
• B) II only
• C) II and III only
• D) I, II, and III

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Definitions:

Treaty of Paris

The 1783 agreement that ended the American Revolutionary War, recognizing American independence and establishing borders for the new nation.

Commander-In-Chief

The supreme leader of the armed forces within a country, often held by the president or monarch, responsible for military decision making.