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

question 28

Multiple Choice

You are thinking of adding one of two investments to an already well diversified portfolio. Security A Security B
Expected return = 12% Expected return = 12%
Standard deviation of returns = 20.9% Standard deviation of returns = 10.1%
Beta = .8 Beta = 2
If you are a risk-averse investor

• A) security A is the better choice.
• B) security B is the better choice.
• C) either security would be acceptable.
• D) cannot be determined with information given.

---

Definitions:

Astroturfing

The practice of creating a false impression of grassroots support or opposition, often through fake reviews, social media accounts, or sponsored content, to manipulate public opinion.