Stock a Has a Beta of 1

question 85

Multiple Choice

Stock A has a beta of 1.2 and a standard deviation of 20 percent. Stock B has a beta of 0.8 and a standard deviation of 25 percent. Portfolio P is a $200,000 portfolio consisting of $100,000 invested in Stock A and $100,000 invested in Stock B. Which of the following statements is most correct? (Assume that the required return is determined by the Security Market Line.)

• A) Stock B has a higher required rate of return than stock A.
• B) Portfolio P has a standard deviation of 22.5 percent.
• C) Portfolio P has a beta equal to 1.0.
• D) Statements a and b are correct.
• E) Statements a and c are correct.

Determine the effects of changes in partnership (admission and withdrawal of partners) on capital accounts and partnership valuation.

Calculate partnership equity and understand the implications of partnership agreements on these calculations.

Apply the concept of goodwill and the bonus method in partnership accounting.

Identify different legal forms of partnerships and their characteristics.

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Definitions:

1860 Convention

Refers to the Democratic National Convention of 1860, which was pivotal in the lead-up to the American Civil War, highlighting deep divisions over slavery.

Charleston

A historic city in South Carolina known for its well-preserved architecture, rich history, and significant role in the American Civil War.

Constitutional Union Party

A political party in the United States formed in 1860, which sought to avoid secession by focusing on the Constitution and the Union without addressing the contentious issue of slavery.

Upper South

A subregion of the southeastern United States, typically considered to include states like Virginia, North Carolina, and Tennessee, known for their distinct historical, economic, and cultural characteristics compared to the Deep South.