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You are interested in investing in a portfolio including stocks A, B, C and D. You...

You are interested in investing in a portfolio including stocks A, B, C and D. You have talked to three different financial strategists: Dan, Paul and Mary. Assuming that the risk-free rate is 4% and the expected return on the market is 12%, based on the below data from each strategist, which one will you go with? Explain why that would be your decision (choose one person). (Hint: the negative investments would be "short-selling" as explained in the text).

Stock

Beta

Dan’s Investment

Paul's Investment

Mary's Investment

A

1.3

2500

5000

10,000

B

1.0

2500

5000

10,000

C

0.8

2500

5000

-5000

D

-0.5

2500

-5000

-5000
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