Based on the security market line, Robo-Tech stock has a required return of 14% and Friendly
Insurance Company has a required return of 10%. Robo-Tech has a standard deviation of returns of
18%. Therefore,
A) the beta for Friendly must be greater than the beta for Robo-Tech because Friendly is the
better buy for a risk-averse investor.
B) Friendly must have a standard deviation of returns of less than 18% because Friendly is less
risky than Robo-Tech.
C) all rational investors will prefer Friendly over Robo-Tech.
D) for a well-diversified investor, Friendly is less risky than Robo-Tech.
D
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Values of harmony, face, conformity, and ordered relationships in ______ imply that large-scale change is risky.
a. China b. Hong Kong c. Japan d. Taiwan
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Capital budgeting investments are based on the assumption that rates of return on investments
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