Have a Portfolio P That Consists of 50% Stock X

question 119

Multiple Choice

have a portfolio P that consists of 50% Stock X and 50% Stock YStock X has a beta of 0.7 and Stock Y has a beta of 1.3 The standard deviation of each stock's returns is 20% The stocks' returns are independent of each other, i.e., the correlation coefficient, r, between them is zeroGiven this information, which of the following statements is CORRECT?

• A) The required return on Portfolio P is equal to the market risk premium (rM − rRF).
• B) Portfolio P has a beta of 0.7.
• C) Portfolio P has a beta of 1.0 and a required return that is equal to the riskless rate, rRF.
• D) Portfolio P has the same required return as the market (rM).
• E) Portfolio P has a standard deviation of 20%.

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Definitions:

Operationalization

Refers to the process of strictly defining variables into measurable factors in research, allowing them to be empirically and quantitatively tested.

Double-Blind

An experimental procedure in which neither the participants nor the experimenters know who is receiving a particular treatment, to prevent bias.

Randomly Assigned

A method used in experiments where participants are allocated to different groups or conditions in a way that is determined by chance.

Control

The capacity to shape or guide the actions of individuals or the progression of situations.