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

Question

Quizplus · Accepted Answer

Volatility is a reasonable measure of risk for large portfolios but not necessarily for individual securities, as individual securities can have unique risks not captured by volatility alone.

Which of the Following Statements Is FALSE