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Stock A has an Equity Beta of 0.9 and Stock B has an Equity Beta of 0.7. Using concepts from portfolio theory and the Capital

Stock A has an Equity Beta of 0.9 and Stock B has an Equity Beta of 0.7. Using concepts from portfolio theory and the Capital Asset Pricing Model, determine whether each of the following two statements is true, false, or cannot be determined from the information provided.

Stock A has higher variance of returns than Stock B.

a. True

b. False

c. Cannot be determined.

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