Answer
The very sensitive stock would expect to have the higher average return.
Work Step by Step
The very sensitive stock could be deemed riskier, and because of the increased risk, a higher return would be desired by the shareholder.
Principles of Economics, 7th Edition
by Mankiw, N. Gregory
Published by
South-Western College
ISBN 10:
128516587X
ISBN 13:
978-1-28516-587-5
Chapter 27 - Part IX - The Basic Tools of Finance - Problems and Applications - Page 582: 6
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