The greater the variability of the possible returns on an investment, _____.
A)the lesser the expected return
B)the lower the standard deviation of the investment
C)the higher the actual return on the investment
D)the riskier the investment
E)the lower the beta of the investment

Question

The greater the variability of the possible returns on an investment, _____. 
A)the lesser the expected return
B)the lower the standard deviation of the investment
C)the higher the actual return on the investment
D)the riskier the investment
E)the lower the beta of the investment

Quizplus · Accepted Answer

Variability in returns indicates uncertainty and potential for losses, hence making the investment riskier. Therefore, the correct option is D - the riskier the investment.

The Greater the Variability of the Possible Returns on an Investment