Answer the Questions Below Using the Following Information on Stocks

question 11

Essay

Answer the questions below using the following information on stocks A,B,and C.

Assume the risk-free rate of return is 3% and the expected market return is 12%
a.Calculate the required return for stocks A,B,and C.
b.Assuming an investor with a well-diversified portfolio,which stock would the investor want
to add to his portfolio?
c.Assuming an investor who will invest all of his money into one security,which stock will the investor choose?

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Definitions:

Trait

A characteristic or quality of an individual that is considered to be relatively stable and enduring.

Openness to Experience

A personality trait characterized by an individual's willingness to try new things, engage in a variety of experiences, and embrace novelty and change.

Conscientiousness

A character quality marked by being well-organized, reliable, and having a profound sense of responsibility.

Peer Acceptance

The degree to which an individual is socially accepted by their peers, influencing their social status and relationships.