The ____ the variance of returns, everything else remaining constant, the ____ the dispersion of expectations and the ____ the risk.
A) larger, greater, lower
B) larger, smaller, higher
C) larger, greater, higher
D) smaller, greater, lower
E) smaller, greater, greater

Question

Quizplus · Accepted Answer

According to the statement, the larger the variance of returns, the greater the dispersion of expectations (meaning expectations are more spread out), and the higher the risk. Therefore, option C is the correct choice as it correctly states that the variance has a positive correlation with both dispersion of expectations and risk.

The ____ the Variance of Returns, Everything Else Remaining Constant