Question $20(1\mathrm{.}5$ points$)$

Which of the following statements is TRUE?

Risk$-$averse investors prefer securities with high standard deviations.

Calculus of variations $($CV$)$ adjusts standard deviations to compare the risk of

securities with different expected returns.

If the returns from security are normally distributed, $86\%$ of the observations fall

within one standard deviation of the expected value.

An increase in risk will result in an increase in the standard deviation.

Standard deviations can be computed for stock returns but not for bond yields.