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Take a Test . Secure : https//www Player Test.aspx?testld-1728735 yes Principles of Business Finance Test: Exam 2 Time Remaining:024319 Sutnt This Question: 1 pt I 39 or 41 (7 complete This Test: 41 pts possil You are thinking of adding one of two investments to an already well diversified portfiolio Security A Security B Expected returns 12% Expected return : 12% Standard deviation of returns 20 9% Standard deviation of returns Beta 8 Beta 2 10.1% If you are a risk- averse investor O A. security B is the better choice O B. security A is the better choice ° C. either security would be acceptable O D. cannot be determined with information given

Explanation / Answer

Stock A is a high risky investment as it has higher standard deviation and beta compared to Stock B. As a risk averse investor , you should choose less risky stock i.e. Stock B. The answer is Option A.

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