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Stock A’s expected return is 15% and its standard deviation is 5%

Stock A’s expected return is 15% and its standard deviation is 5%. Which of the following statements is correct?

a. There is a 68% chance that Stock A’s realized returns will be between 10% and 20%.
b. There is a 95% chance that Stock A’s realized returns will be between 10% and 20%.
c. If an investor holds only Stock A and does not own any other assets, then this investor is rational.
d. Forming a two-stock portfolio by adding a negatively correlated second stock will make beta the relevant measure of this portfolio’s risk exposure.
e. None of the above statements are correct.

Jan 31 2020 View more View Less

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