7. Suppose you expect Google stock to have a standard deviation of 25% and a bet

Question

7. Suppose you expect Google stock to have a standard deviation of 25% and a beta of 2.1. At the same time, you expect Apple to have a standard deviation of 30% and a beta of 1, which of these statements are true? ccording to the CAPM, investors require a higher return on Apple stock than Google stocok. a. b. Google has more total and systematic risk. c. Apple is the riskier investment for a diversified investor. d. Apple has less total risk; Google has less systematic risk. e. None of the above.

Explanation / Answer

Since Google has beta of 2.1 that means it is 110% volatile than the market price while Apple company has beta 1 that means the price of company is equal to market price.

Hence the Google share is more risky than Apple share.

So the answer is B

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