Stock a Has a Beta of 0

question 18

Multiple Choice

Stock A has a beta of 0.7, whereas Stock B has a beta of 1.3.Portfolio P has 50% invested in both A and B.Which of the following would occur if the market risk premium increased by 1% but the risk-free rate remained constant?

• A) The required return on both stocks would increase by 1%.
• B) The required return on Portfolio P would remain unchanged.
• C) The required return on Stock A would increase by more than 1%, while the return on Stock B would increase by less than 1%.
• D) The required return for Stock A would fall, but the required return for Stock B would increase.
• E) The required return on Portfolio P would increase by 1%.

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Definitions:

Industrial Product

Goods or services sold from one business to another for the production of other goods or services, rather than for direct consumption by the consumer.

Conviction Stage

is a phase in the sales process where the potential customer develops a strong belief in the value and benefits of the product, leading towards a purchase decision.

Salesperson's Goal

The primary objective of a salesperson, which typically involves meeting or exceeding specific sales targets or quotas within a set timeframe.

Buying Decision

The process by which a consumer decides whether to purchase a product or service, influenced by various factors.