Question: Pierre is trying to maximize his expected return by taking on the most risk possible.Which of the following investments should earn the highest risk premium?

Pierre is trying to maximize his expected return by taking on the most risk possible.Which of the following investments should earn the highest risk premium?

A) U.S. Treasury Bill

B) Stock with a beta of 1.38

C) Bond with a beta of 0.74

D) Diversified portfolio like the S&P 500

E) Portfolio that has a beta of 1.20

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