The lower the standard deviation of returns on a security, the _____ the expected rate of return and the _____ the risk. Multiple Choice lower; lower lower; higher higher; lower higher; higher

The lower the standard deviation of returns on a security, the _ the expected rate of return and the _ the risk. Multiple Choice lower; lower lower; higher higher; lower higher; higher

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 3Q: Security A has an expected return of 7%, a standard deviation of returns of 35%, a correlation...

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Question

The lower the standard deviation of returns on a security, the _____ the expected rate of return and the _____ the risk.

Multiple Choice

lower; lower
lower; higher
higher; lower
higher; higher

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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