Given the following investment returns from two stocks:Stock A: 5%,6%,7%,9%,23% (mean = 10% and standard deviation = 7.416%)Stock B: 50%,60%,70%,90%,230% (mean = 100% and standard deviation = 74.16%).Which stock has the greatest relative risk?Which stock should a risk seeking investor choose?Two correct answers1. Stock A has the greatest relative risk.2. Stock B has the greatest relative risk.3. Both stocks have the same amount of relative risk.4. A risk seeking investor should invest in Stock A.5. A risk seeking investor should invest in Stock B.6. A risk seeking investor should invest in either of the two stocks since they are equally attractive.

Given: Stock A: mean = 10% and standard deviation = 7.416%.Stock B: mean = 100% and standard deviation = 74.16%.For Stock A: Coefficient of variation=SDmean×100% =7.41610×100% =74.16% For Stock B: Coefficient of variation=SDmean×100% =74.16100×100% =74.16% Since both the coefficient of variations are equal, both the stock has the same relative risk. The risk-seeking investor can choose any of the two stocks. Answer: Two correct answers are 3. Both stocks have the same amount of relative risk and 6. A risk-seeking investor should invest in either of the two stocks since they are equally attractive.

Answered: Given the following investment returns…

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Question

Given the following investment returns from two stocks:
Stock A: 5%,6%,7%,9%,23% (mean = 10% and standard deviation = 7.416%)
Stock B: 50%,60%,70%,90%,230% (mean = 100% and standard deviation = 74.16%).
Which stock has the greatest relative risk?

Which stock should a risk seeking investor choose?

Two correct answers

Stock A has the greatest relative risk.

Stock B has the greatest relative risk.

Both stocks have the same amount of relative risk.

A risk seeking investor should invest in Stock A.

A risk seeking investor should invest in Stock B.

A risk seeking investor should invest in either of the two stocks since they are equally attractive.

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