Which of the Following Statements Is Correct

question 33

Multiple Choice

Which of the following statements is correct?

• A)If the returns from two stocks are perfectly positively correlated and the two stocks have equal variance, an equally weighted portfolio of the two stocks will have a variance which is less than that of the individual stocks.
• B)If a stock has a negative beta, its expected return must be negative.
• C)According to the CAPM, stocks with higher standard deviations of returns will have higher expected returns.
• D)A portfolio with a large number of randomly selected stocks will have less market risk than a single stock with has a beta equal to 0.5.
• E)None of the above statements are correct.

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