Question

Rank the following three stocks by their total risk level, highest to lowest. Night Ryder has an average return of 11 percent and standard deviation of 24 percent. The average return and standard deviation of WholeMart are 12 percent and 29 percent; and of Fruit Fly are 17 percent and 25 percent.

Answer 1

The average return to risk ratio will provide information of risk level

NIght Ryder =11%/24%=0.46
WholeMart =12%/29%=0.41
Fruit Fly =17%/25%=0.68
Lower the ratio higher the risk
Hence highest risk to lowest risk are Whole Mart  > Night Ryder> Fruit Fly