Question: Return Standard Deviation Stock A 15% 8.30% Stock B 14% 2.10% As a financial advisor, you are assigned a new client who is considering investing

Return

Standard Deviation

Stock A 15% 8.30%
Stock B 14% 2.10%

As a financial advisor, you are assigned a new client who is considering investing in one of the above two stocks, A or B.

The table above shows information about the performance of stocks A and B last year.

1) As a financial advisor, are there factors other than return and risk that should be considered in making this decision?

2) Based on these factors, what stock would you recommend to the client?

3) What reasons will you convey to your client to justify your decision in recommending this stock? 4) How will this recommendation impact the client?

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