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    Compare TEC shares against the market portfolio

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    Compare TEC shares against the market portfolio using both standard deviation and beta as risk measure. What are you conclusion? Explain your answer.

    TEC Market Portfolio
    Expected Return 15% 20%
    Standard Deviation 25% 20%
    Beta 0.50 1.00.

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    Solution Preview

    In finance, standard deviation is applied to the annual rate of return of an investment to measure the investment's volatility (risk). A volatile stock would have a high standard deviation. In this case, the standard deviation of TEC is higher than that of the market portfolio, indicating it's more volatile over the years than other ...

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