1. Consider the following information:

Standard Deviation Beta

Security T 30% 1.90

Security K 30% 1.20

1. Which security has more total risk? (5 points)
2. Which security has more systematic risk? (5 points)
3. Which security should have the higher expected return? (5 points)
4. What does the total risk consist of? What kind of risk is eliminated with portfolio diversification? (5 points)