1. Historically speaking, which security would be expected to contain the highest amount of risk?
A share of common stock
A Treasury bill
A bond issued by a corporation
A Treasury bond
A bond issued by a municipality
2. Which one of the following statements is more likely to be correct concerning the comment, "Stock A has a higher expected return than Stock B"?
A) Stock B is a cyclical stock
B) Stock A has a higher beta
C) Stock A has more unique risk
D) Stock B plots below the security market line