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You currently hold a passive portfolio and are considering the addition of another stock. Select the more appropriate stock to add to your portfolio and

You currently hold a passive portfolio and are considering the addition of another stock. Select the more appropriate stock to add to your portfolio and determine what, if any, action should be taken with the other.

Stock

Expected Return

Beta

Standard Deviation

A

11%

0.8

10%

B

14%

1.5

11%

RF = 6%; E(RS&P) = 12%

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