Which of the following statements is FALSE?
A)Portfolios with higher volatility have historically rewarded investors with higher average returns.
B)Investments with higher volatility should have a higher risk premium and therefore higher returns.
C)Volatility seems to be a reasonable measure of risk when evaluating returns on large portfolios and the returns of individual securities.
D)Riskier investments must offer investors higher average returns to compensate them for the extra risk they are taking on.

Question

Quizplus · Accepted Answer

Volatility is not always a reasonable measure of risk for individual securities, as it may not capture all aspects of risk, such as liquidity risk or credit risk, which can be significant for individual securities.

Which of the Following Statements Is FALSE