Analysis Intermediate: Evaluating Risk

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1.
If a security has a high standard deviation, its volatility is low.
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False. If a security has a high standard deviation, its volatility is high.
2.
When choosing your investments, look for those that will give you the highest returns for your acceptable level of risk.
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True. This is one of the cornerstones of successful investing.
3.
In the CAPM formula, Rf stands for _______.
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Risk-free return. In the CAPM formula, Rf stands for risk-free return.
4.
If a security is more volatile than the market, it has a beta _______.
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Greater than 1. A beta greater than 1 indicates that a stock is more volatile than the overall market.
5.
A security with a high coefficient of variation is highly volatile.
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True. A security with a high coefficient of variation is highly volatile.