Question

Which of the following is most accurate:

Select one or more:

a. a stock with a high standard deviation will always have a high coefficient of variation

b. a stock with a high standard deviation will probably have a low coefficient of variation

c. a stock with a high standard deviation will probably have a low return

d. a stock with a high standard deviation will always have a high return

e. a stock with a high standard deviation will probably have a high beta

Answer 1

Stocks with high standard deviation will be generally having a higher beta because beta is a reflection of the volatility of the stock as standard deviation is a reflection of deviation from the mean in case of Return, so I think that higher standard deviation will be meaning that beta might also be on the higher side .all the other statements are false because they are not presenting with true facts about standard deviation in relation to return or coefficient of variation.

Right answer will be option (e) stock with high standard deviation will probably have a high beta.