Portfolio A has an expected return of 16% with a standard deviation of 8%. Portfolio B has an expected return of 12% with a standard deviation of 7%.
A) Portfolio A has a lower risk/return.
B) Portfolio B has a larger expected terminal wealth.
C) The portfolios have the same risk/return.
D) Portfolio B has a more certain return.

Question

Quizplus · Accepted Answer

Portfolio A has a higher expected return and a higher standard deviation than Portfolio B. Therefore, Portfolio A has a lower risk/return ratio.

Portfolio a Has an Expected Return of 16% with a Standard