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

Question

You observe the following information regarding Companies X and Y:

Company X has a higher expected return than Comanany Y

Comapany 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 folling is Correct?

a. company X has more company-specific risk than company y

b. company X has a lower coefficient of variation than companyy

c. company X has less makret risk than company Y

d. Company X's return will be ngative when Y's returns are positive.

e. Company X's stock is a better buy than company Y's stock.

Explanation / Answer

b is correct because coefficient of variation = ( std deviation/ return) . Company X has lower standard deviation with a greater return thus a lower coefficient of variation ratio.

Rest of the options are inconclusive with the given data

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