The standard deviation of returns of: I. small capitalisation shares is higher than that of large capitalisation shares.
II. large capitalisation shares is lower than that of corporate bonds.
III. corporate bonds is higher than that of Australian treasuries.
Which statement is true?
A)I and III
B)I only
C)I, II, and III
D)I and II

Question

Quizplus · Accepted Answer

Statement I is true as small capitalisation shares are generally considered to be more risky than large capitalisation shares, which leads to a higher standard deviation of returns. 
Statement III is also true as corporate bonds are generally considered to be riskier than Australian treasuries, which leads to a higher standard deviation of returns. 
Statement II is not necessarily true as the standard deviation of returns for large capitalisation shares can vary depending on the specific shares being compared to corporate bonds.

The Standard Deviation of Returns Of: I