Stock a Has a Beta of 0

question 122

Multiple Choice

Stock A has a beta of 0.7,whereas Stock B has a beta of 1.3.Portfolio P has 50% invested in both A and B.Which of the following would occur if the market risk premium increased by 1% but the risk-free rate remained constant?

• A) The required return on Portfolio P would increase by 1%.
• B) The required return on both stocks would increase by 1%.
• C) The required return on Portfolio P would remain unchanged.
• D) The required return on Stock A would increase by more than 1%,while the return on Stock B would increase by less than 1%.
• E) The required return for Stock A would fall,but the required return for Stock B would increase.

---

Definitions:

Workouts

Planned sessions of physical exercise or training aimed at enhancing physical fitness or achieving specific fitness goals.

Fluid Replacement

The process of restoring lost body fluids, such as water and electrolytes, especially important during and after physical activity.

Heat Index

A measure that combines air temperature and humidity to describe how hot it feels to the human body.

Body Fat

The portion of the human body that consists of fat tissue, important for energy storage and insulation.