The expected rate of return for the stock of CornhuskerEnterprises is 20%, with

Question

The expected rate of return for the stock of CornhuskerEnterprises is 20%, with a standard deviation of 15%. Theexpected rate of return for the stock of Mustang Associates is 10%,with a standard deviation of 9% a) which stock would you consider to be riskier? why? The expected rate of return for the stock of CornhuskerEnterprises is 20%, with a standard deviation of 15%. Theexpected rate of return for the stock of Mustang Associates is 10%,with a standard deviation of 9% a) which stock would you consider to be riskier? why?

Explanation / Answer

Cornhusker Enterprises is riskier because its standard deviation is higher than that of Mustang Associates. Generally, standard deviation is a measure of the total risk of a stock.

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