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

question 33

Multiple Choice

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%.

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Definitions:

Categorization

The cognitive process of grouping things based on shared characteristics or properties.

Musical Instrument

An object or device created or adapted to produce musical sounds.

Grand Piano

A large, full-bodied musical instrument with horizontally strung strings, producing a wide range of piano sounds.

Electronic Keyboard

An Electronic Keyboard is a musical instrument that uses electronic circuits to generate sounds in various tones and rhythms.