You are considering investing in one of two well-diversified portfolios. portfolio a has an expected return of 8% and a beta of 1.35 while portfolio b has an expected return of 6% and a beta of 0.80. assuming that you are a rational risk-averse investor and the risk-free rate is 2%, which of the two portfolios should you choose and why?

Robert black, regional manager for ford in texas and oklahoma, faced a dilemma. the ford f-150 pickup truck was the best-selling pickup ever, yet ford's headquarters in detroit had decided to introduce a completely redesigned f-150. how could mr. black sell both trucks at the same time? he still had "old" f-150s in stock. in his advertising, mr. black referred to the new f-150s as follows: "not a better f-150. just the only truck good enough to be the next f-150." this statement represents ford's of the new f-150.