High Beta BUSI 2093 | UNIT 9 | Risk and Return QUESTION 2.1 Low Beta High Standard Deviation RISKY MEDIUM LOW RISK RISKY MEDIUM LOW RISK RISKY MEDIUM LOW RISK Low Standard Deviation High Risk & High Expected Return Low Risk & Lower Expected Return RISKY MEDIUM LOW RISK RISKY MEDIUM LOW RISK RISKY MEDIUM LOW RISK

Current Attempt in Progress Define systematic risk. B I וכ B T₂ T² Tx Ix E23 ||| € E E DO PM = 99 @₁ á

Su 2 The standard deviation of return on investment A is 19%, while the standard deviation of return on investment B is 14%. If the covariance of returns on A and B is 0.004, the correlation coefficient between the returns on A and B is 00:05:46 臺 Mc Graw Hill Delivery co ler.

TOTAL VS. SYSTEMATIC RISK • Consider the following information: Standard              Deviation               BetaSecurity C                 20%                  1.25Security K                 30%                  0.95 • Which security has more total risk?• Which security has more systematic risk?• Which security should have the higherexpected return?