Investment A has an expected return of 7.8% with a standard deviation of 2%.Investment B has an expected return of 7.2% with a standard deviation of 3.1%.Which stock is more likely to have a return greater than 10%?
A)Stock A
B)Stock B
C)The probability is the same for both A and B.
D)Unable to determine.

Question

Quizplus · Accepted Answer

Stock B is more likely to have a return greater than 10% because its higher standard deviation of 3.1% indicates a wider distribution of returns, which includes a greater likelihood of exceeding the 10% threshold compared to Stock A with a lower standard deviation of 2%.

Investment a Has an Expected Return of 7