Stock A's Beta Is 1

question 80

Multiple Choice

Stock A's beta is 1.5 and Stock B's beta is 0.5.Which of the following statements must be true,assuming the CAPM is correct.

• A) Stock A would be a more desirable addition to a portfolio then Stock B.
• B) In equilibrium,the expected return on Stock B will be greater than that on Stock A.
• C) When held in isolation,Stock A has more risk than Stock B.
• D) Stock B would be a more desirable addition to a portfolio than A.
• E) In equilibrium,the expected return on Stock A will be greater than that on B.

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Definitions:

N/um

A term from the Khoisan language referring to a sacred, spiritual power believed to reside in healers and used during healing dances and rituals.

Animism

The belief that nature is enlivened or energized by distinct personalized spirit beings separable from bodies.

Free-Ranging Spirits

Beliefs or practices in some cultures that involve spirits or entities which move freely in the world, unconfined to specific locations, objects, or rituals.

Patriarchic Religion

A religious system or society in which men hold the primary power and predominate in roles of leadership, moral authority, social privilege, and control of property.