Explain why standard deviation may not be an entirely appropriate measure of risk for purposes of this comparison. (Select the best answerbelow.)

A.

The standard deviation measure fails to take into account both the volatility and the return of the investment. Investors would prefer higher return but lessvolatility, and the coefficient of variation provides a measure that takes into account both aspects ofinvestors' preferences.

B.

The standard deviation measure fails to take into account both therisk-free rate and the return of the investment. Investors would prefer higher return but lessvolatility, and the coefficient of variation provides a measure that takes into account both aspects ofinvestors' preferences.

C.

The standard deviation measure fails to take into account both the volatility and therisk-free rate. Investors would prefer higher return but lessvolatility, and the coefficient of variation provides a measure that takes into account both aspects ofinvestors' preferences.

D.

The standard deviation measure fails to take into account both the volatility and the return of the investment. Investors would prefer lower return but highervolatility, and the coefficient of variation provides a measure that takes into account both aspects ofinvestors' preferences.