1.Analysts often cite mean reversion as the reason why they will sometimes adjust a beta factor. If an analyst observed a statistically significant beta of 1.85, what would be the adjusted beta?

2: Given the following information, which investment should you chose to invest in relative to risk-adjusted returns?

Investment A. Investment B

E(rp). 8.75% 9.5%

rf 3.5% 3.5%

St. Deviation. 12% 15%

Group of answer choices

Investment B because it has the higher Sharpe Ratio of .4375 Investment A because it has the higher Sharpe Ratio of .4375 Investment A because it has the lower Sharpe Ratio of .40 Investment B because it has the lower Sharpe Ratio of .40