Stock A's Beta Is 1

question 80

Multiple Choice

Stock A's beta is 1.5 and Stock B's beta is 0.5.Which of the following statements must be true,assuming the CAPM is correct.

• A) Stock A would be a more desirable addition to a portfolio then Stock B.
• B) In equilibrium,the expected return on Stock B will be greater than that on Stock A.
• C) When held in isolation,Stock A has more risk than Stock B.
• D) Stock B would be a more desirable addition to a portfolio than A.
• E) In equilibrium,the expected return on Stock A will be greater than that on B.

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Definitions:

Hierarchy

An arrangement or institution where individuals or entities are hierarchically positioned above or below others based on their status or power.

Domain-specific Goals

Objectives that are relevant and applied within a specific area of activity, knowledge, or interest.

Domain-general Goals

Objectives or aims that are not specific to a particular field or discipline but are applicable across multiple contexts and situations.

Domain-general Adaptations

Cognitive processes or mechanisms that can be applied to a wide range of different tasks and environments, not specialized for any particular domain.