Which One of the Following Statements Is Correct

question 204

Multiple Choice

Which one of the following statements is correct?

• A) A beta of 1.2 indicates that a security has less risk than the overall market.
• B) Treasury bills have a beta of zero.
• C) A stock with a beta of 1.4 has less systematic risk than a stock with a beta of.9.
• D) The risk premium associated with a stock will decrease as the beta of the stock increases.
• E) The beta of a diversified portfolio will approach zero as the number of stocks in the portfolio is increased.

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Definitions:

Professional Groups

Organizations or associations comprised of individuals from the same profession or occupational field, often formed for advocacy, networking, and professional development purposes.

Years of Experience

The total amount of time an individual has spent in a particular professional role or industry.

Significance Level

A threshold set by the researcher to determine the maximum probability of wrongly rejecting the null hypothesis, commonly denoted as alpha (α) and often set at 0.05 or 5%.

Linearly Related

A relationship between two variables in which the change in one variable is directly proportional to the change in another.