Generally speaking, which of the following best correspond to a wide frequency distribution?
A) High standard deviation, low rate of return
B) Low rate of return, large risk premium
C) Small risk premium, high rate of return
D) Small risk premium, low standard deviation
E) High standard deviation, large risk premium

Question

Quizplus · Accepted Answer

A wide frequency distribution indicates a large amount of variability in the data, which is represented by a high standard deviation. Additionally, a large risk premium suggests that there is a greater potential for variation in returns, which is also reflected in a high standard deviation. Therefore, the best choice is E, which corresponds to high standard deviation and large risk premium.

Generally Speaking, Which of the Following Best Correspond to a Wide