The standard deviation of returns of:
I.small capitalization stocks is higher than that of large capitalization stocks.
II.large capitalization stocks is lower than that of corporate bonds.
III.corporate bonds is higher than that of Treasury bills.
Which statement is true?

Question

Quizplus · Accepted Answer

Statement I is true because small cap stocks are generally more volatile and have higher risk than large cap stocks, resulting in a higher standard deviation of returns. Statement III is also true because corporate bonds are riskier than Treasury bills, leading to a higher standard deviation of returns. However, statement II may not necessarily be true as it depends on the specific securities being compared within the large cap stocks and corporate bonds categories.

The Standard Deviation of Returns Of