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Business, 10.11.2019 02:31 timijebs

You are considering investing in one of two well-diversified portfolios. portfolio a has an expected return of 8% and a beta of 1.35 while portfolio b has an expected return of 6% and a beta of 0.80. assuming that you are a rational risk-averse investor and the risk-free rate is 2%, which of the two portfolios should you choose and why? a. portfolio a because it has a higher risk premium. b. portfolio b because it has less market risk. c. portfolio b because it has a higher reward-to-risk ratio. d. portfolio a because it offers a greater reward per unit of risk.

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