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Problem regarding the standard deviation

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Portfolio P has $200,000 consisting of $100,000 invested in Stock A and $100,000 in Stock B. Stock A has a beta of 1.2 and a standard deviation of 20%. Stock B has a beta of 0.8 and a standard deviation of 25%. Which of the following statements is CORRECT?

  • Stock B has a higher required rate of return than Stock A.
  • Portfolio P has a beta of less than 1.0.
  • More information is needed to determine the portfolio's beta.
  • Portfolio P has a beta of 1.0.

Reference no: EM131412637

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