Which share is likely to further reduce risk for an investor currently holding his portfolio in a well-diversified portfolio of common share?
A)Share A
B)Share B
C)There is no difference between A or B
D)You cannot tell from the information given The figures below show plots of monthly excess returns for two shares plotted against excess returns for a market index.

Question

Quizplus · Accepted Answer

Share B has a lower beta than Share A, meaning it is less volatile compared to the market. Therefore, holding Share B would further reduce risk for the investor's well-diversified portfolio.

Which Share Is Likely to Further Reduce Risk for an Investor