Given two portfolios: A, which has an expected return of 14% and a beta of 1.2; and B, which has an expected return of 15% and a beta of 1.6. Which of the two portfolios has high level of relative risk?

Question

Quizplus · Accepted Answer

Portfolios with higher betas are considered to have a higher level of relative risk. Therefore, Portfolio B with a beta of 1.6 has a higher level of relative risk compared to Portfolio A, which has a beta of 1.2. The expected return of the portfolios is not relevant in determining their relative risk.

Given Two Portfolios: A, Which Has an Expected Return of 14