A study examining the performance of numerous assets from the United States and around the world confirms that
A) riskier assets with higher standard deviations experienced lower returns.
B) riskier assets with higher standard deviations experienced higher returns.
C) standard deviation did a better job of explaining the returns than beta.
D) U.S. equities are highly correlated with world government bonds and with the commodities index.
E) most assets (including common stocks) have positive correlations with inflation.

Question

Quizplus · Accepted Answer

Riskier assets with higher standard deviations typically experience higher returns as compensation for the increased risk, according to the risk-return tradeoff principle in finance.

A Study Examining the Performance of Numerous Assets from the United