Stock A has an expected rate of return of 8 percent, a standard deviation of 20 percent,
Question:
Stock A has an expected rate of return of 8 percent, a standard deviation of 20 percent, and a market beta of 0.5. Stock B has an expected rate of return of 12 percent, a standard deviation of 15 percent, and a market beta of 1.5. Which investment is riskier?
Why?
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Step by Step Answer:
Based on the standard deviation Stock A is considered riskier Standard deviation measures the volatility of a stocks price A higher standard deviation indicates a larger dispersion of data points arou...View the full answer
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