Which Security is More Risky?
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Security A has an expected rate of return of 6%, a standard deviation of returns of 30%, a correlation coefficient with the market of -0.25, and a beta coefficient of -0.5. Security B has an expected return of 11%, a standard deviation of returns of 10%, a correlation with the market of 0.75, and a beta coefficient of 0.5. Which security is more risky? Why?
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Solution Summary
The riskiness of security in terms of a portfolio and standalone risk is determined.
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We need to look at the riskiness of security in terms of a portfolio and in terms of standalone risk.
When we look in a portfolio context, riskiness is assessed by ...
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