Question
(a)Consider two investments, X and Y. Investment X has a beta of 1.10 and a standard deviation of 17%, all of which is systematic risk.
(a)Consider two investments, X and Y. Investment X has a beta of 1.10 and a standard deviation of 17%, all of which is systematic risk. Investment Y has a beta of 0.95 and a standard deviation of 30%, half of which is non-systematic risk. Which investment should have a higher expected rate of return? Explain your answer.
(4 marks)
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Fundamentals Of Investing
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
13th Edition
978-0134083308, 013408330X
