Question

As an investor and based on your understanding of risk, which of the following statements is true?

(A) You should invest in a stock if the expected rate of return on an asset with similar risk is higher than the expected rate of return from the stock.
(B) You should invest in a stock if the expected rate of return from the stock is greater than the expected rate of return on an asset with a similar risk.

Answer 1

Answer: B. You should invest in a stock if the expected rate of return from the stock is greater than the expected rate of return on an asset with a similar risk.