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  3. 14. given the same information from question 13 an

14. Given the same information from Question 13 and that Stock X has an expected...

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Finance

14. Given the same information from Question 13 and that Stock X has an expected return of 4% and a

standard deviation of 9.17%, how will you choose between Stock X and the portfolio (50% Stock X + 50% Stock Y)?

A) Stock X is a better investment, since Stock X has a higher expected return.

B) Stock X is a better investment, since Stock X has a higher lower standard deviation.

C) The portfolio is a better investment, since the portfolio has a higher expected return and a lower standard deviation.

D) It depends. Neither is strictly better. Although Stock X has a lower expected return, the portfolio has a higher standard deviation.

7. The terms ________ and ________ mean the same thing.

A) nondiversifiable risk; unsystematic risk

B) diversifiable risk; systematic risk

C) nondiversifiable risk; systematic risk

D) total risk; unique risk

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