Which of the Following Statements Is CORRECT

question 113

Multiple Choice

Which of the following statements is CORRECT?

• A) The CAPM has been thoroughly tested, and the theory has been confirmed beyond any reasonable doubt.
• B) If two "normal" or "typical" stocks were combined to form a 2-stock portfolio, the portfolio's expected return would be a weighted average of the stocks' expected returns, but the portfolio's standard deviation would probably be greater than the average of the stocks' standard deviations.
• C) If investors become more risk averse, then (1) the slope of the SML would increase and (2) the required rate of return on low-beta stocks would increase by more than the required return on high-beta stocks.
• D) An increase in expected inflation, combined with a constant real risk-free rate and a constant market risk premium, would lead to identical increases in the required returns on a riskless asset and on an average stock, other things held constant.
• E) A graph of the SML as applied to individual stocks would show required rates of return on the vertical axis and standard deviations of returns on the horizontal axis.

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Definitions:

Hip Fractures

Breaks in the upper part of the thigh bone (femur), commonly associated with osteoporosis and falls in the elderly.

Falls

Unexpected events where a person comes to rest on the ground, floor, or lower level, often leading to injuries, especially in elderly populations.

Growth and Development

The process through which humans and other organisms undergo changes in size, shape, and function over time, encompassing physical, cognitive, and emotional development.

Life Span

The maximum duration of life of a species or individual, often considered in the context of factors that influence the length and quality of life.