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5) An analyst designed two portfolios namely Portfolio A and portfolio B. Betas of these both portfolios are the same, 1.2. On average, the stocks

5) An analyst designed two portfolios namely Portfolio A and portfolio B. Betas of these both portfolios are the same, 1.2. On average, the stocks held in

portfolio A have a higher level of firm-specific risk than those portfolio B. based on capital asset pricing model, which portfolio should in invest in?

Which portfolio should give you a higher expected return?

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