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A stock has an expected return of 12 percent and a standard deviation of 25 percent. Long-term Treasury bonds have an expected return of 5
A stock has an expected return of 12 percent and a standard deviation of 25 percent. Long-term Treasury bonds have an expected return of 5 percent and a standard deviation of 9 percent. Given this data, which of the following statements is correct?
Multiple Choice
a. The two assets have the same coefficient of variation.
b. The bond investment has a better risk-return trade-off.
c. Both investments have the same diversifiable risk.
d. The stock investment has a better risk-return trade-off.
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