The risk-free rate, average returns, standard deviations, and betas for three funds and the S&P 500 are given below.

If these portfolios are subcomponents that make up part of a well-diversified portfolio, then portfolio __________ is preferred.

Multiple Choice

A

S&P 500

B

C

Fund Avg Std Dev 11.0% 28.0% Beta 1.20 13.0% 24.5% 1.25 16.5% 31.5% 1.45 S&P 500 10% 18% 3.0%