Stock X Has a Beta of 0

question 102

Multiple Choice

Stock X has a beta of 0.6,while Stock Y has a beta of 1.4.Which of the following statements is CORRECT?

• A) A portfolio consisting of $50,000 invested in Stock X and $50,000 invested in Stock Y will have a required return that exceeds that of the overall market.
• B) Stock Y must have a higher expected return and a higher standard deviation than Stock X.
• C) If expected inflation increases but the market risk premium is unchanged,then the required return on both stocks will fall by the same amount.
• D) If the market risk premium declines but expected inflation is unchanged,the required return on both stocks will decrease,but the decrease will be greater for Stock Y.
• E) If expected inflation declines but the market risk premium is unchanged,then the required return on both stocks will decrease but the decrease will be greater for Stock Y.

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Definitions:

Skin

The body's largest organ, serving as a protective barrier between the inside of the body and the external environment.

Immunoglobulin

Proteins in the blood plasma, also known as antibodies, which are crucial for the immune system's response against pathogens.

B Cells

A type of white blood cell that plays a crucial role in the immune system by producing antibodies to fight infections.

IgD

Immunoglobulin D, a type of antibody that has a role in the immune system, particularly in the initiation of immune responses.