#19

How does the relationship between the average return and the historical volatility of individual stocks differ from the relationship between the average return and the historical volatility of large, well-diversified portfolios? (Select the best choice below.) A. For small stocks and small portfolios there is a clear relationship. Higher returns are associated with higher volatilities. However, for large stocks and large portfolios, there is no relationship between returns and volatilities. B. Large portfolios with higher returns have higher volatilities. For individual stocks, no clear relationship exists. C. There is no clear relationship between returns and volatilities for individual stocks or large portfolios. D. Higher returns are always associated with large volatilities