Which of the following statements is TRUE?
◦ Calculus of variations (CV) adjusts standard deviations to compare the risk of securities with different expected returns.
◦ Risk-averse investors prefer securities with high standard deviations.
◦ 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.
◦ If the returns from a security are normally distributed, 86% of the observations fall within one standard deviation of the expected value.