Suppose Stock X Has a Beta of 2

question 197

Multiple Choice

Suppose stock X has a beta of 2.5 and stock Y has a beta of 0.5.From this we can conclude that X has

• A)5 times the nondiversifiable risk of the market portfolio.
• B)5 times the nondiversifiable risk of Y.
• C)2.5 times the nondiversifiable risk of Y.
• D)2.5 times the diversifiable risk of the market portfolio.

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Definitions:

Person-Situation Controversy

The debate concerning whether the person or the situation is more influential in determining a person's behavior.

Environments

The surroundings or conditions in which an organism lives or operates, including natural, social, and built contexts.

Traits

Characteristics or qualities that form an individual's distinctive character, often considered to be innate and stable over time.

Emotional Instability

A characteristic of individuals who experience rapid, intense emotional changes that are difficult to predict.