Solution: In the financial world, it is often mentioned that with investments, the higher the risk, the higher the return. In many cases, the risk associated
Question: In the financial world, it is often mentioned that with investments, the higher the risk, the higher the return. In many cases, the risk associated with an investment is measured by the variability of the returns provided by the investment. The data regarding annual percentage returns by two investment options over a ten year period is shown below:
|
Year
1 |
Year
2 |
Year
3 |
Year
4 |
Year
5 |
Year
6 |
Year
7 |
Year
8 |
Year
9 |
Year
10 |
|
| Investment A | 8.3 | -6.2 | 20.9 | -2.7 | 33.6 | 42.9 | 24.4 | 5.2 | 3.1 | 30.5 |
| Investment B | 12.1 | -2.8 | 6.4 | 12.2 | 27.8 | 25.3 | 18.2 | 10.7 | -1.3 | 11.4 |
Does the data support the statement about higher risk being associated with higher returns? Explain.
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