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Part 1

Betas and risk rankingsPersonal Finance ProblemYou are considering three stocks

A, B, and C

for possible inclusion in your investment portfolio. Stock A has a beta of

1.1,

stock B has a beta of

1.6,

and stock C has a beta of

0.4.

a. Rank these stocks from the most risky to the least risky.

b.If you believed that the stock market was getting ready to experience a significant decline, which stock should you add to your portfolio?

c.If you anticipated a major stock market rally, which stock would you add to your portfolio?

a.Which stock is the most risky one? (Select the best answer below.)

A.Stock Upper B

Stock B

B.Stock Upper A

Stock A

C.Stock Upper C