Question

4. Suppose that you find National Vision Inc. (Ticker: EYE) has the widest dispersion of returns...

4. Suppose that you find National Vision Inc. (Ticker: EYE) has the widest dispersion of returns compared to the others in your portfolio. Then National Vision Inc. (EYE) should have the:

a. lowest expected rate of return b. higher standard deviation c. lowest real rate of return d. lowest variance

Homework Answers

Answer #1

When there is a widest dispersion of stocks in the portfolio, it will mean that those stocks are having the highest variances and they will be showing the highest standard deviation because there are not uniform in nature and they are expected to show any value as their rate of return so it can be said that they will be having the highest standard deviation

Dispersion has nothing to be related with expected rate of return and lower rate of return and lower variances so they all are false statements.

Correct answer will be option (b) higher standard deviation.

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