Question

Given the plot of normal distributions for stocks A and B below, which of the following statements is true?

1) Stock A has a higher mean than Stock B
2) Stock B has a higher mean than Stock A
3) Stock A has a higher standard deviation than Stock B
4) Stock B has a higher standard deviation than Stock A

Answer 1

Based on the given information, Stock B has a higher standard deviation than Stock A.

Step-by-step explanation:

Based on the given information, Option 4) Stock B has a higher standard deviation than Stock A is the correct statement.

The plot of normal distributions shows that the distribution for X (Stock B) has a larger standard deviation than the distribution for X (Stock A).

Standard deviation measures how much the data is spread out from the mean. A higher standard deviation indicates more variability in the data.