Multiple choice

As compared to a fund with fluctuating total returns, a fund with stable positive earnings

  1. Gives higher returns

  2. Is less risky

  3. Gives lower returns

  4. Is more risky
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A fund with stable positive earnings is inherently less risky than one with fluctuating returns, even if the latter sometimes delivers higher returns. Risk in finance is defined as volatility; stable earnings mean lower uncertainty and lower risk.

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