You are considering investing in one of two listed companies, A or B. Consider the following information on the standard deviation of annual returns and betas of both companies:

Company Standard deviation Beta

A 15% pa 0.75

B 10% pa 1.95

a)Which company carries a higher level of systematic risk?

company A

company B

b)Shares in which company represent the most risky investment when purchased alone?

company A

company B

c)Shares in which company would contribute the most systematic risk if added to a well diversified portfolio?

company A

company B