Security A has the following historical returns: 8% in year 1, 4% in year 2, and –6% in year 3 (the given information is the same as in the previous question). Suppose security A has a beta of 1. Security B has a beta of 2. The variance of security B's historical returns over the same period is 0.0016. We know that security ________ has higher total risk. Security ________ should have a higher expected return.

Answer rating: 100% (QA)

To determine which security has higher total risk and which one should have a higher expected return ... View the full answer