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Basic Question 11 of 23
The ______ the standard deviation, the ______ the risk and correspondingly the lower the required return.
B. lower; higher
C. higher; lower
D. higher; higher
E. Both A & D are correct.
A. lower; lower
B. lower; higher
C. higher; lower
D. higher; higher
E. Both A & D are correct.
User Contributed Comments 4
| User | Comment |
|---|---|
| PedroEdmundo | That' what the CAPM, the SML and the CML about... risk-return relationship: higher return higher risk, lower risk lower return, at least expected |
| soarer1 | Why not D too? |
| chamad | because the higher the risk, the higher the required return. So D is incorrect. |
| jonan203 | read the question carefully, "corresponding the lower" is not true for D |
Your review questions and global ranking system were so helpful.
Lina
Learning Outcome Statements
calculate and interpret the mean, variance, and covariance (or correlation) of asset returns based on historical data
calculate and interpret portfolio standard deviation
describe the effect on a portfolio's risk of investing in assets that are less than perfectly correlated
CFA® 2025 Level I Curriculum, Volume 2, Module 1.