While ________ Seems to Be a Reasonable Measure of Risk

question 96

Multiple Choice

While ________ seems to be a reasonable measure of risk when evaluating a large portfolio, the ________ of an individual security does not explain the size of its average return.

• A) volatility, volatility
• B) the mean return, standard deviation
• C) mode, volatility
• D) mode, mean return

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Definitions:

Acid-test Ratio

A financial ratio that measures a company's ability to pay off its short-term liabilities with its quick assets, providing insight into its immediate financial health.

Marketable Securities

Financial instruments or securities that are easily convertible into cash within a short period without a significant loss of value.

Accounts Receivable

Money owed to a company by its customers for goods or services delivered or used but not yet paid for.

Inventory Turnover

Inventory Turnover is a ratio that shows how many times a company's inventory is sold and replaced over a period of time, indicating the efficiency of inventory management.