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Which security has the greatest systematic risk

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Reference no: EM132775908

Use the following to answer following three questions :

                     Standard Deviation          Beta

Security X           0.35                      1.45

Security Y         0.28                       1.06

Security Z         0.44                          1.22

Problem 1. Which of the following is correct?

A) Security Z has the greatest total risk because it has the largest standard deviation.

B) Security X has the greatest total risk because it has the largest beta.

C) Security X has the greatest diversifiable risk because it has the largest beta.

D) Security Y has the lowest total risk because it has the lowest beta.

E) An equally-weighted portfolio of XYZ will have the same systematic risk as the market portfolio.

Problem 2. Which security has the greatest systematic risk?

A) Z because it has the largest standard deviation.

B) X because it has the largest beta coefficient.

C) Z because it has a high beta and the largest standard deviation.

D) Y because it has the greatest diversifiable risk.

E) It is not possible to tell given the information above.

Reference no: EM132775908

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