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O flel/CAseny/Baruch Student/Download/CHI2pd You are thinking of adding one of two investments to an already well diversified portfolio, if you are risk averse, which one is better? 33% 33% 33% Expected return 12% Standard deviationofretums:10.1% Beta 2 Secunty Expectedretam 12% Standarddmation fretums-M9% Beta.? A. A ?.? C. Cannot determined with information given 0 o 9 8 4
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Answer #1

1. Option A because a risk averse investor will choose A because of low risk or low standard deviation.

2. Option A. Because stock A highest volatility and beta therefore it should have maximum risk premium.

3.FALSE

4.The beta will be the weighted average of all

= 100*0.75+ 200*1.47+200*0.82 +600*1.6)/(600+200+200+100)

=1.35 (option A)

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