Which of the Following Statements Is CORRECT

question 92

Multiple Choice

Which of the following statements is CORRECT?

• A) If the returns on two stocks are perfectly positively correlated and these stocks have identical standard deviations,an equally weighted portfolio of the two stocks will have a standard deviation that is less than that of the individual stocks.
• B) A portfolio with a large number of randomly selected stocks would have more market risk than a single stock that has a beta of 0.5,assuming that the stock's beta was correctly calculated and is stable.
• C) If a stock has a negative beta,its expected return must be negative.
• D) A portfolio with a large number of randomly selected stocks would have less market risk than a single stock that has a beta of 0.5.
• E) According to the CAPM,stocks with higher standard deviations of returns must also have higher expected returns.

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Definitions:

Truck Electronics

The electronic systems and devices integrated into trucks, managing functions such as engine control, navigation, and communication.

Piezo-Resistive

Pertaining to a material or device that changes its electrical resistance in response to mechanical stress.

Pressure Values

Likely intended to be "Pressure Valves," which are mechanical devices that regulate or control the flow of a fluid by opening, closing, or partially obstructing passageways based on pressure.

Zener Diode

Specialty diode designed to reverse-bias conduct only after a specific voltage value is attained. Used in electronic voltage regulators.