Security A has a higher standard deviation of returns than security B. We would expect that: I. Security A would have a higher r

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3 years ago

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Security A has a higher standard deviation of returns than security B. We would expect that: I. Security A would have a higher r

isk premium than 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. I and II only C. II and III only D. I, II, and III

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1 answer:

Grace [21] · Answer 1 · 2022-04-26T06:10:01+03:00

Answer: i. Security A would have a higher risk premium than 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.

Explanation:

From the question, we are informed that Security A has a higher standard deviation of returns than security B. Based on the above scenario, it should be noted that Security A would have a higher risk premium than security B since it has higher standard deviation and also, thee likely range of returns for security A in any given year would be higher than the likely range of returns for security B.