Question
You observe the following information regarding Companies X and Y: i. Company X has a higher expected return than company Y. ii. Company Y has
You observe the following information regarding Companies X and Y:
i. Company X has a higher expected return than company Y.
ii. Company Y has a lower standard deviation of returns than Company Y.
iii. Company X has a higher beta than Company Y.
Given this information, which of the following statements is CORRECT?
A. Company X has more diversifiable risk than Company Y.
B. Company S has a lower coefficient of variation than Company Y.
C. Company X has less market risk than Company Y.
D. Company X's returns will be negative when Y's returns are positive.
E. Company X's stock is a better buy than Company Y's stock.
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Introduction To Corporate Finance
Authors: Laurence Booth, Sean Cleary
3rd Edition
978-1118300763, 1118300769
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