Question 1. Common stock A has an expected return of 10%, a standard deviation of future returns of 25%, and a beta of 1.25. Common stock B has an expected return of 12%, a standard deviation of future returns of 15%, and a beta of 1.50. Which stock is riskier? Explain.
Question 2.
a. Suppose you own $1 million worth of 30-year Treasury bonds. Is this asset risk-less?
b. Can you think of an asset that is truly risk-less?