If a stock's returns are volatile,then the stock:
A) cannot be considered a negative risk asset.
B) can still be considered a negative risk asset.
C) has macro risk, but no specific risk.
D) does not offer diversification potential.

Question

Quizplus · Accepted Answer

The stock can still be considered a negative risk asset even if its returns are volatile. Volatility does not necessarily indicate a positive or negative risk, but rather a level of uncertainty. Some investors are willing to bear the risks associated with volatility because they believe it may result in higher returns. Therefore, the stock can still be considered a negative risk asset depending on an investor's risk tolerance and investment objectives.

If a Stock's Returns Are Volatile,then the Stock