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Business, 08.11.2019 06:31 brutusjohnson1

4) consider two well-diversified portfolios: portfolio 1 has an expected return of 8% and three-quarters average market risk. while portfolio 2 has an expected return of 12% and a beta of 1.50. if the risk free rate is 2.5%, which portfolio would a rational risk-averse investor prefer and why? a) portfolio 2 because is has the higher reward-to-risk ratio. b) portfolio 1 because it has the lower risk c) portfolio 2 because it has the higher reward. d) portfolio 1 because it has the higher reward-to-risk ratio.

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