The figures below show plots of monthly excess returns for two stocks plotted against excess returns for a market index.
-Which stock is riskier to a non-diversified investor who puts all his money in only one of these stocks?
A) Stock A is riskier
B) Stock B is riskier
C) Both stocks are equally risky
D) You cannot tell from the information given.

Question

The figures below show plots of monthly excess returns for two stocks plotted against excess returns for a market index. 
-Which stock is riskier to a non-diversified investor who puts all his money in only one of these stocks?
A) Stock A is riskier 
B) Stock B is riskier 
C) Both stocks are equally risky 
D) You cannot tell from the information given.

Quizplus · Accepted Answer

Stock A has a higher standard deviation, which means it is more volatile and therefore riskier.

The Figures Below Show Plots of Monthly Excess Returns for Two