According to the following information, which of the stocks would be considered riskiest in a diversified portfolio of investments? $$\begin{array} { l c c }
\underline{\text { Stock }} &\underline{?} &\underline{ ?}\
\text { ABC } & 12.5 \% & 1.0 \
\text { FGH } & 8.0 \% & 0.5 \
\mathrm { MNO } & 20.2 \% & 2.4 \
\mathrm { TUV } & 15.3\% & 30
\end{array}$$
A)Stock MNO, because it has the highest standard deviation.
B)Stock TUV, because it has the highest beta.
C)Stock FGH, because it has the highest s/b ratio
D)Stock ABC, because its beta is the same as the market beta (1.0) and the market is always very, very risky.

Question

According to the following information, which of the stocks would be considered riskiest in a diversified portfolio of investments? $$\begin{array} { l c c } 
\underline{\text { Stock }} &\underline{?} &\underline{ ?}\
 \text { ABC } & 12.5 \% & 1.0 \
\text { FGH } & 8.0 \% & 0.5 \
\mathrm { MNO } & 20.2 \% & 2.4 \
\mathrm { TUV } & 15.3\% & 30
\end{array}$$ 
A)Stock MNO, because it has the highest standard deviation.
B)Stock TUV, because it has the highest beta.
C)Stock FGH, because it has the highest s/b ratio
D)Stock ABC, because its beta is the same as the market beta (1.0) and the market is always very, very risky.

Quizplus · Accepted Answer

Stock TUV is considered the riskiest in a diversified portfolio because it has the highest beta, indicating it is most sensitive to market movements.

According to the Following Information, Which of the Stocks Would