The coefficient of variation is a better measure of risk tha
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5. The coefficient of variation is a better measure of risk than the standard deviation if the expected returns of the securities being compared differ significantly.
a. True
b. False
6. In portfolio analysis, we often use ex post (historical) returns and standard deviations, despite the fact that we are interested in ex ante (future) data.
a. True
b. False
7. Typically, debentures have higher interest rates than mortgage bonds primarily because the mortgage bonds are backed by assets while debentures are unsecured.
a. True
b. False
8. If two firms have the same current dividend and the same expected growth rate, their stocks must sell at the same current price or else the market will not be in equilibrium.
a. True
b. False
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Solution Summary
The coefficient of variation is a better measure of risk than the standard deviation if the expected returns of the securities being compared differ significantly.
a. True
b. False
6. In portfolio analysis, we often use ex post (historical) returns and standard deviations, despite the fact that we are interested in ex ante (future) data.
a. True
b. False
7. Typically, debentures have higher interest rates than mortgage bonds primarily because the mortgage bonds are backed by assets while debentures are unsecured.
a. True
b. False
8. If two firms have the same current dividend and the same expected growth rate, their stocks must sell at the same current price or else the market will not be in equilibrium.
a. True
b. False
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Answers to your study questions:
5. The coefficient of variation is a better measure of risk than the standard deviation if the expected returns of the securities being compared differ significantly.
a. True XX correct, the standard ...
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