Rank the following three stocks by their risk-return relationship, best to worst. Rail Haul has an average return of 10 percent and standard deviation of 15 percent. The average return and standard deviation of Idol Staff are 15 percent and 25 percent; and of Poker-R-Us are 12 percent and 35 percent.
A) Rail Haul, Idol Staff, Poker-R-Us
B) Idol Staff, Poker-R-Us, Rail Haul
C) Poker-R-Us, Idol Staff, Rail Haul
D) Idol Staff, Rail Haul, Poker-R-Us

Question

Quizplus · Accepted Answer

Rail Haul has the lowest standard deviation (15 percent) and the highest average return (10 percent), making it the least risky and most rewarding stock. Idol Staff has a higher average return (15 percent) but also a higher standard deviation (25 percent), making it riskier than Rail Haul but still more rewarding than Poker-R-Us. Poker-R-Us has the highest standard deviation (35 percent) and the lowest average return (12 percent), making it the riskiest and least rewarding stock.

Rank the Following Three Stocks by Their Risk-Return Relationship, Best