Kevin recently received an inheritance, and he is planning to invest the inheritance in one of four stock portfolios. Which of these portfolios would you expect to have the highest average annual rate of return?
A)A portfolio with a standard deviation of 5%.
B)A portfolio with a standard deviation of 6%.
C)A portfolio with a standard deviation of 8%.
D)A portfolio with a standard deviation of 9%.

Question

Quizplus · Accepted Answer

Generally, a higher standard deviation in a portfolio indicates higher risk, which is often associated with the potential for higher returns.

Kevin Recently Received an Inheritance, and He Is Planning to Invest