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:

Critical Parts

Essential components of a system or machinery that require regular maintenance and monitoring for safety.

Air Ratchet

A pneumatic tool used for loosening or tightening bolts or nuts with minimum effort, utilizing compressed air.

Impact Wrench

An air-powered tool for loosening lug nuts and other tight fasteners.

Fillister

A type of screw or bolt with a cylindrical head having a slightly domed top surface.