Suppose that you are calculating the returns on two portfolios over a 10-year period. Portfolio #1 has a lower dispersion of returns and a higher average rate of return than Portfolio #2. Based on this information, which one of the following do you know with certainty?

Multiple Choice

• Portfolio #1 has a lower standard deviation than Portfolio #2.

• Portfolio #2 has less total risk than Portfolio #1.

• Over the next 10 years, Portfolio #1 will outperform Portfolio #2 .

• Portfolio #2 includes more individual stocks than Portfolio #1.

• Portfolio #1 includes more dividend-paying stocks than Portfolio #2.