Questions 11-13 use the following information: Assume there are 2 portfolios. Portfolio A holds just McDonalds and has a beta of 1.1. Portfolio B holds 100 different stocks and has a beta of 1.1.

• Which portfolio has a greater standard deviation? Why? Explain
• Which portfolio has the higher expected return according to CAPM? Explain.Why?
• Draw the scatterplots of the two portfolios relative to the Standard and Poor’s 500.