Question: Question Completion Status: L A Moving to another question will save this response Question 3 Stock A's beta is 1.4 and Stock B's beta is

 Question Completion Status: L A Moving to another question will save

Question Completion Status: L A Moving to another question will save this response Question 3 Stock A's beta is 1.4 and Stock B's beta is 1.5. If we assume that the Capital Asset Pricing Model holds. Stock A would be a more desirable addition to a portfolio then Stock B. o in equilibrium, the expected return of Stock B will be greater than that of Stock A. When held in isolation, Stock A has more risk than Stock B O Stock B would be a more desirable addition to a portfolio than A O In equilibrium, the expected return of Stock A will be greater than that of B. Moving to another question will save this response

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