Stock A has an expected return of 7 , a standard deviation of expected returns of 35 , a correlation coefficient with the market of 0 3, and a beta coefficient of 0 5 Stock B has an expected return of 12 , a standard deviation of returns of 10 , a 0 7 correlation with the market, and a beta coeffic...

Stock A has an expected return of 7%, a standard deviation of expected returns of 35%, a

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Stock A has an of 7%, a standard deviation of expected returns of 35%, a correlation coefficient with the market of – 0.3, and a of !0.5. Stock B has an of 12%, a standard deviation of returns of 10%, a 0.7 correlation with the market, and a of 1.0. Which security is riskier? Why?

Beta Coefficient
Beta 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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Fundamentals of Financial Management

ISBN: 978-0324664553

Concise 6th Edition

Authors: Eugene F. Brigham, Joel F. Houston

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Question Posted: Oct 05, 2011 08:00 AM

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Stock A has an expected return of 7%, a standard deviation of expected returns of 35%, a

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Security A is less risky if held in a di...View the full answer

Fundamentals of Financial Management

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