You Are Looking at Two Different Stocks

question 197

Multiple Choice

You are looking at two different stocks. IBX has a beta of 1.25 and Microsquish has a beta of 1.95. Which statement is true about these investments?

• A) IBX is always a better addition to your portfolio.
• B) Microsquish is always a better addition to your portfolio.
• C) The expected return on IBX will be the higher of the two.
• D) You cannot tell which of the two will have the higher expected return without further information.
• E) The stock in IBX has the same reward to risk ratio as does Microsquish.

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