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You are thinking of adding one of two investments to an already well- diversified portfolio. Security A Expected Return = 14% Standard Deviation of Returns = 16% Beta = 1.2 Security B Expected Return = 16% Standard Deviation of Returns -20% X Beta = = 1.2 = If you are a risk-averse investor, which one is the better choice? A) Security A B) Security B C) Either security would be acceptable because they have the same beta. D) Security B, but only if Security B's required return is greater than 12% You are thinking of adding one of two investments to an already well- diversified portfolio. Security A Expected Return = 14% Standard Deviation of Returns = 16% Beta = 1.2 Security B Expected Return = 16% Standard Deviation of Returns -20% X Beta = = 1.2 = If you are a risk-averse investor, which one is the better choice? A) Security A B) Security B C) Either security would be acceptable because they have the same beta. D) Security B, but only if Security B's required return is greater than 12%
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As a riskaverse investor you would generally prefer investments with lower levels of risk In this ca... View the full answer
Related Book For
Fundamentals of Financial Management
ISBN: 978-1305635937
Concise 9th Edition
Authors: Eugene F. Brigham
Posted Date:
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