Which of the following represents the correct ordering of standard deviation of

Question

Which of the following represents the correct ordering of standard deviation of returns over the period of 1926 to 2005 from highest to lowest standard deviation of returns?

a. treasury bills, common stocks, long term corporate bonds, small firm common stocks

b. small firm common stocks, common stocks, long term corporate bonds, treasury bills

c. treasury bills, long term corporate bonds, common stocks, small firm common stocks

d. treasury bills, common stocks, long term corporate bonds, small firm common stocks

Explanation / Answer

b. Small firm common stocks, Common stocks, Long-term corporate bonds, Treasury bills Std deviation is highest for common stock as dividends are uncertain. While Treasury stock has least Std Dev as they are assurd

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