Stock LB Has a Beta of 0

question 24

Multiple Choice

Stock LB has a beta of 0.5 and Stock HB has a beta of 1.5 The market is in equilibrium, with required returns equaling expected returns Which of the following statements is CORRECT?

• A) If both expected inflation and the market risk premium (rM − rRF) increase, the required return on Stock HB will increase by more than that on Stock LB.
• B) If both expected inflation and the market risk premium (rM − rRF) increase, the required returns of both stocks will increase by the same amount.
• C) Since the market is in equilibrium, the required returns of the two stocks should be the same.
• D) If expected inflation remains constant but the market risk premium (rM − rRF) declines, the required return of Stock HB will decline but the required return of Stock LB will increase.
• E) If expected inflation remains constant but the market risk premium (rM − rRF) declines, the required return of Stock LB will decline but the required return of Stock HB will increase.

Understand the evolution and role of emotions in human survival according to theoretical perspectives.

Understand the definition and scope of neuroeconomics and its contributions to our understanding of decision making.

Comprehend the neurological basis of visual perception and language processing in split-brain patients.

Learn about brain injuries or conditions (such as contralateral neglect) and their symptoms, along with diagnostic tests.

---

Definitions:

Cell Body

The part of a neuron that contains the nucleus and most of the cytoplasm and organelles, serving as the metabolic center of the neuron.

Skeletal Muscle

Skeletal muscle is a type of muscle tissue that is attached to bones and is responsible for voluntary movements in the body.

Bones

Rigid organs that constitute part of the endoskeleton of vertebrates, supporting body structures and facilitating movement.

Large Arteries

Blood vessels that carry oxygen-rich blood away from the heart to various parts of the body, characterized by their large diameter and elastic walls.