Figure 27-4
-Refer to Figure 27-4. Which of the following statements is correct?
A)At point A the standard deviation of the portfolio is 3.
B)A risk averse person always will choose to be at point A.
C)At point D the portfolio consists of about 15 percent stocks and 85 percent safe assets.
D)The figure shows that the greater the risk, the greater the return.

Question

Figure 27-4 
-Refer to Figure 27-4. Which of the following statements is correct?
A)At point A the standard deviation of the portfolio is 3. 
B)A risk averse person always will choose to be at point A. 
C)At point D the portfolio consists of about 15 percent stocks and 85 percent safe assets. 
D)The figure shows that the greater the risk, the greater the return.

Quizplus · Accepted Answer

The correct statement is D, as it reflects the fundamental principle of investment that higher risk is associated with the potential for higher returns. This is a basic concept in finance where the risk-return tradeoff indicates that to achieve higher returns, investors must be willing to accept a greater level of risk.

Figure 27-4 -Refer to Figure 27-4. Which of the Following Statements Is