Use the following to answer questions 1-3:

Standard Deviation Beta

Security X 0.35 1.45

Security Y 0.28 1.06

Security Z 0.44 1.22

1. Which of the following is correct?

A) Security Z has the greatest total risk because it has the largest standard deviation.

B) Security X has the greatest total risk because it has the largest beta.

C) Security X has the greatest diversifiable risk because it has the largest beta.

D) Security Y has the lowest total risk because it has the lowest beta.

E) An equally-weighted portfolio of XYZ will have the same market risk as the market portfolio.

2. Which security has the greatest systematic risk?

A) Z because it has the largest standard deviation.

B) X because it has the largest beta coefficient.

C) Z because it has a high beta and the largest standard deviation.

D) Y because it has the greatest diversifiable risk.

E) It is not possible to tell given the information above.

3. Which security has the greatest required return?

A) Y because it has the largest standard deviation.

B) X because it has the largest beta coefficient.

C) Z because it has the highest ratio of standard deviation to beta.

D) Y because it has the lowest beta coefficient.

E) It is not possible to tell given the information above