Posted by **mamey** on Monday, May 5, 2014 at 4:36pm.

You are thinking of adding one of two investments to an already well diversified portfolio. Security A with expected return of 12%, standard deviation of 20.9%, and beta of 0.8. Security B with expected return of 12%, standard deviation of 10.1%, and beta of 2. 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

d. Cannot be determined with information given

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