You are comparing the returns of two portfolios for a 10-year period.Portfolio I has a lower dispersion of returns and a higher average rate of return than Portfolio II.Given this,what do you know with certainty?
A)Portfolio I has a lower standard deviation than Portfolio II.
B)Portfolio I is riskier than Portfolio II.
C)Portfolio II has less total risk than Portfolio I.
D)Portfolio I will outperform Portfolio II over the next 10 years.
E)Portfolio II consists of more individual stocks than Portfolio I.

Question

Quizplus · Accepted Answer

Portfolio I having a lower dispersion of returns indicates it has a lower standard deviation, which is a measure of dispersion or variability in returns. A higher average rate of return combined with lower variability suggests Portfolio I is less risky compared to Portfolio II, but it doesn't guarantee future performance or the composition of the portfolios.

You Are Comparing the Returns of Two Portfolios for a 10-Year