An Equity Security with Systematic Risk Equal to the Average

question 43

Multiple Choice

An equity security with systematic risk equal to the average amount of systematic risk of all equity securities in the market:

• A) has a market beta equal to one.
• B) should expect to earn the same rate of return as the average stock in the market portfolio.
• C) gives no insight into the risk premium of stock.
• D) Both a and b are correct.

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Definitions:

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Miracle Case

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Supreme Court Decision

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