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The historical returns for two investmentsA and Bare summarized in the following table for the period to , LOADING.... Use the data to answer the
The historical returns for two investmentsA and Bare summarized in the following table for the period to LOADING.... Use the data to answer the questions that follow.
A
Year Rate of Return
Average
a On the basis of a review of the return data, which investment appears to be more risky? Why?
b Calculate the standard deviation for each investment's returns.
c On the basis of your calculations in part b which investment is more risky? Compare this conclusion to your observation in part a
a On the basis of a review of the return data, which investment appears to be more risky? Why?Choose the best answer below.
A
Investment A and investment B have equal risk because the average returns are the same.
B
The riskier investment appears to be investment B with returns that are closer to the average relative to investment A whose returns are farther from the average.
C
The riskier investment appears to be investment A with returns that vary widely from the average relative to investment B whose returns show less deviation from the average.
D
The riskier investment appears to be investment B with returns that vary widely from the average relative to investment A whose returns show less deviation from the average.
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