Question:
As a financial advisor, you are assigned a new client who is considering investing in one of two stocks, A or B.
The table below shows information about the performance of stocks A and B last year.
|
Return
|
Standard Deviation
|
|
Stock A
|
15 %
|
8.3%
|
|
Stock B
|
14%
|
2.1%
|
- As a financial advisor, are there factors other than return and risk that should be considered in making this decision?
- Based on these factors, what stock would you recommend to the client?
- What reasons will you convey to your client to justify your decision in recommending this stock?
- How will this recommendation impact the client?