Which of the following statements is TRUE?
A)The more stable the possible returns, the greater the risk.
B)Risk means the probability that the actual return from an investment is less than the expected return.
C)The range is a more accurate measure of risk than the standard deviation, because the range uses the maximum and minimum values, whereas the standard deviation uses all the observations.
D)Securities offering lower expected rates of return tend to be riskier.

Question

Quizplus · Accepted Answer

Risk is the probability or likelihood that the actual return from an investment will be less than the expected return. The more stable the possible returns, the lower the risk, so statement A is false. The range is not an accurate measure of risk as it only considers the maximum and minimum values, whereas standard deviation takes into account all the observations, so statement C is false. Lower expected rates of return tend to be associated with lower risk, so statement D is false.

Which of the Following Statements Is TRUE