A stock has an expected return of 15 percent and a standard deviation of 20 percent.Long-term Treasury bonds have an expected return of 9 percent and a standard deviation of 11 percent.Given this data,which of the following statements is correct?
A) The two assets have the same coefficient of variation.
B) The stock investment has a better risk-return trade-off.
C) The bond investment has a better risk-return trade-off.
D) Both investments have the same diversifiable risk.

Question

Quizplus · Accepted Answer

CoV for the stock investment: 20/15 = 1.33; CoV for the bond: 15/9 = 1.22

A Stock Has an Expected Return of 15 Percent and a Standard