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You own $50 worth of GE and $75 worth of 3M. You know the following details...

You own $50 worth of GE and $75 worth of 3M. You know the following details about the stocks:

Stock Beta Standard Deviation
GE 1.16 38%
3M 1.18 37%

Which stock has a higher expected return?

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Answer #1

3M has higher expected returns because it has higher beta of 3M and lower standard deviation of 37%.

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