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Consider the following two securities A and B. 1) (a) Compute expected rate of return for each security. (b) Compute the standard deviation and coefficient
Consider the following two securities A and B. 1) (a) Compute expected rate of return for each security. (b) Compute the standard deviation and coefficient of variation for each security. (c) As a risk averse investor, which security should you invest in? 2) Assume that the risk-free rate is 5% and the market return is 15%, Calculate the required rate of return (RRR) for each of Security A and B, knowing that Beta of security A is 0.9 and the beta of security B is 1.5 . Choose which security you should invest in. (Compare between the RRR and the Expected Return)
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