Stock a Has an Expected Return of 10% and a Standard

question 87

Multiple Choice

Stock A has an expected return of 10% and a standard deviation of 20%. Stock B has an expected return of 13% and a standard deviation of 30%. The risk-free rate is 5% and the market risk premium, rM − rRF, is 6%. Assume that the market is in equilibrium. Portfolio AB has 50% invested in Stock A and 50% invested in Stock B. The returns of Stock A and Stock B are independent of one another, i.e., the correlation coefficient between them is zero. Which of the following statements is CORRECT?

• A) Stock A's beta is 0.8333.
• B) Since the two stocks have zero correlation, Portfolio AB is riskless.
• C) Stock B's beta is 1.0000.
• D) Portfolio AB's required return is 11%.
• E) Portfolio AB's standard deviation is 25%.

Recognize that adaptations are not solely genetically determined but result from the interaction of genetic information and the environment.

Grasp the role of environmental factors in the development of social and solitary phenotypes within a species.

Acknowledge the dynamics of gene expression changes across the lifespan of organisms like honey bees and their behavioral implications.

Understand the significance of homeobox genes in the evolutionary conservation and developmental organization across diverse species.

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Definitions:

Direct Perception

The process of immediately understanding or knowing something through sensory input, without the need for conscious reasoning.

Creativity

The use of imagination or original ideas to create something; inventiveness that is often applied in artistic or problem-solving contexts.

Scholastic Ability

The capacity or potential of an individual to perform and achieve in academic settings.

Alex Osborn

An advertising executive and creative thinker known for coining the term "brainstorming" and co-founding the Creative Education Foundation.