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Assume there are 2 portfolios. Portfolio A holds just McDonalds and has a beta of 1.1. Portfolio B holds 100 stocks and has a beta
- Assume there are 2 portfolios. Portfolio A holds just McDonalds and has a beta of 1.1. Portfolio B holds 100 stocks and has a beta of 1.1.
- Which portfolio has a greater standard deviation? Explain (really explain)
- Which portfolio has the higher expected return according to CAPM? Explain.
- Why do we get the same expected return for Portfolio A and B (according to CAPM) even though Portfolio A has more standard deviation?
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