Which security has the greatest expected return

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Reference no: EM132775910

Use the following to answer following three questions :

Standard Deviation Beta

Security X 0.35 1.45

Security Y 0.28 1.06

Security Z 0.44 1.22

Problem 1. Which security has the greatest expected return?

A) Y because it has the largest standard deviation.

B) X because it has the largest beta coefficient.

C) Z because it has the highest ratio of standard deviation to beta.

D) Y because it has the lowest beta coefficient, and therefore the lowest risk.

E) It is not possible to tell given the information above.

Problem 2. What is the expected return on asset A if it has a beta of 0.6, the expected market return is 15%, and the risk-free rate is 6%?

A) 5.4%

B) 9.6%

C) 11.4%

D) 15.0%

Reference no: EM132775910

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