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You Are Thinking of Adding One of Two Investments to an Already

question 107

Multiple Choice

You are thinking of adding one of two investments to an already well- diversified portfolio.
You are thinking of adding one of two investments to an already well- diversified portfolio.   If you are a risk-averse investor,which one is the better choice? A)  Security A B)  Security B C)  Either security would be acceptable because they have the same beta. D)  Security B, but only if Security B's required return is greater than 12%.
If you are a risk-averse investor,which one is the better choice?


Definitions:

Working Memory

Information being actively processed by rehearsal systems.

Sensory Memory

The memory of an event that is recorded by sensory neurons that lasts for a very brief time after the event ends.

Iconic Memory

The visual memory of an event stored in the sensory register.

Echoic Memory

The auditory memory of an event stored in the sensory register.

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