You observe the following information regarding Company X and Company Y: Company

Question

You observe the following information regarding Company X and Company Y:

Company X has a higher expected return than Company Y.
Company X has a lower standard deviation of returns than Company Y.
Company X has a higher beta than Company Y.

Given this information, which of the following statements is CORRECT?

Select the correct answer.

Company X's returns will be negative when Y's returns are positive.
Company X has less market risk than Company Y.
Company X has a lower coefficient of variation than Company Y.
Company X's stock is a better buy than Company Y's stock.
Company X has more company-specific risk than Company Y.

Explanation / Answer

Company X has a lower coefficient of variation than Company Y.

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