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You are given the following information about two stocks: Stock Std. Deviation beta A .30 1.2 B .40 0.9 1. Which stock has more total
You are given the following information about two stocks:
Stock | Std. Deviation | beta |
A | .30 | 1.2 |
B | .40 | 0.9 |
1. Which stock has more total risk?
2. Which stock is more risky to an investor who puts all of their wealth into one stock?
3. Which stock is riskier to a well-diversified investor?
4. Which stock has a higher expected rate of return in equilibrium?
Also, please give the reasons why.
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