25 percent Long term Teeasury bonds have an expected return

25 percent Long term Teeasury bonds have an expected return of 5 percent and o standard de abon of 9 percent Grvert.s data, which of the following saam en .. correct? Multiple Choice The stock nvestment a bener thk return trade off The Bond nvestment nas a better nsk-retum tade off The two assets have the same coefticient of vanation Both investnents have the same Prev ?0 of 2411 Next >

Solution

Coefficient of variation=Risk to retrun ratio=Standard Deviation/Expected returns

Stocks:25%/12%=2.0833

Treasury Bonds:9%/5%=1.8

Hence, Bonds have better risk-return tradeoff