Question: Based on current dividend yields and expected growth rates, the expected rates of return on stocks A and B are 11% and 15%, respectively. The

Based on current dividend yields and expected growth rates, the expected rates of return on stocks A and B are 11% and 15%, respectively. The beta of stock A is .8, while the beta of stock B is 1.5. The T-Bill rate is currently 6%, while the expected rate of return of the S&P 500 Index is 12%. The annualized standard deviation of stock A is 10%, while that of stock B is 11%. If you currently hold a passive index portfolio, would you choose to add either of these stocks to your holdings?

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