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  3. 3. a highly risk-averse investor is considering th

3. A highly risk-averse investor is considering the addition of an asset to a 10-stock...

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Accounting

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3. A highly risk-averse investor is considering the addition of an asset to a 10-stock portfolio. The two securities under consideration both have an expected return equal to 15 percent. However, the distribution of possible returns associated with Asset A has a standard deviation of 12 percent, while Asset B's standard deviation is 8 percent. Both assets are correlated with the market with Q=0.75. Which asset should the risk-averse investor add to his/her portfolio? a. Asset A. b. Asset B. c. Both A and B. d. Neither A nor B. e. Cannot tell without more information

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