Security A is less risky if held in a diversified portfolio because of its lower beta and

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Security A is less risky if held in a diversified portfolio because of its lower beta and negative correlation with other stocks. In a single-asset portfolio, Security A would be more risky because \(\sigma_{\mathrm{A}}>\sigma_{\mathrm{B}}\) and \(\mathrm{CV}_{\mathrm{A}}>\mathrm{CV}_{\mathrm{B}}\).

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Financial Management Theory And Practice

ISBN: 9780324259681

11th Edition

Authors: Eugene F Brigham, Michael C Ehrhardt

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