Sock Figaro has a standard deviation of 25% and a beta of 0.9. Sock Almaviva has

ID: 2767037 • Letter: S

Question

Sock Figaro has a standard deviation of 25% and a beta of 0.9. Sock Almaviva has a standard deviation of 15% and a beta of 1.1. This means that:

a - Almaviva will always have the highest actual return.

b - We need to know the risk-free rate to know which will have the highest expected return.

c - Almaviva has the most risk, and Figaro will have the highest expected return.

d - Figaro has the most risk, and both will have the same expected return.

e - Figaro has the most risk, and Almaviva will have the highest expected return.

Beta tells you the risk so almaviva has higher risk. As S,D of figaro is higher expected return will be higher.

c - Almaviva has the most risk, and Figaro will have the highest expected return.

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