Purchase Solution

Finance

Not what you're looking for?

Ask Custom Question

Common stock A has an expected return of 10%, a standard deviation of future returns of 25%, and a beta of 1.25. Common stock B has an expected return of 12%, a standard deviation of future returns of 15%, and a beta of 1.50. Which stock is riskier. Explain.

Purchase this Solution

Solution Summary

Finance

Solution Preview

It depends on how you define riskier.

1) If riskier is understood the normal way (ie uncertainty of future return), then stock A is riskier. Since A has a std. dev. of 25% (vs. B 15%), then return of stock A is much more unpredictable. We know that the expected ...

Purchase this Solution


Free BrainMass Quizzes
Paradigms and Frameworks of Management Research

This quiz evaluates your understanding of the paradigm-based and epistimological frameworks of research. It is intended for advanced students.

Lean your Process

This quiz will help you understand the basic concepts of Lean.

Motivation

This tests some key elements of major motivation theories.

Operations Management

This quiz tests a student's knowledge about Operations Management

Balance Sheet

The Fundamental Classified Balance Sheet. What to know to make it easy.