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A student is comparing stocks to invest in. The following are the stock returns (in dollars) in the last 10 months.
Monthly Returns
Stock A: 20, 18, 25, 17, 20, 17, 18, 8, 17, 20
Stock B 30.50, 21.67, 25, 26, -20, 45, -25, -8.20, 50, 35.
1. The standard deviation of the returns of stock B is? Select one: a. 23.72. b. 26.47. c. 18.00. d. 147.07. e. 17.00.
2. In a comparison of stock B and stock A, which of the following statements is true about stock B?
Select one:
a. Stock B is a high-risk high-return investment.
b. Stock B is a low-risk high-return investment.
c. Stock B is a high-risk normal/average-return investment.
d. Stock B is a low-risk low-return investment.
e. Stock B is a high-risk low-return investment.
The student should invest in
Select one:
a. stock A because it has lower returns.
b. stock B because it has higher standard deviation.
c. stock A because it has a lower coefficient of variation.
d. stock B because it has higher returns.
e. stock B because it has a higher coefficient of variation.
Answer & Explanation
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