# Security A has an expected return of 7 percent, a standard deviation of returns of 35 percent,

## Question:

Security A has an expected return of 7 percent, a standard deviation of returns of 35 percent, a correlation coefficient with the market of _0.3, and a beta coefficient of _1.5. Security B has an expected return of 12 percent, a standard deviation of returns of 10 percent, a correlation with the market of 0.7, and a beta coefficient of 1.0. Which security is riskier? Why?

Beta CoefficientBeta coefficient is a measure of sensitivity of a company's stock price to movement in the broad market index. It is an indicator of a stock's systematic risk which is the undiversifiable risk inherent in the whole financial system. Beta coefficient... Expected Return

The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...

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**Related Book For**

## Financial management theory and practice

**ISBN:** 978-0324422696

12th Edition

**Authors:** Eugene F. Brigham and Michael C. Ehrhardt