Which of the Following Statements Is CORRECT

question 112

Multiple Choice

Which of the following statements is CORRECT?

• A) A portfolio with a large number of randomly selected stocks would have more market risk than a single stock that has a beta of 0.5, assuming that the stock's beta was correctly calculated and is stable.
• B) If a stock has a negative beta, its expected return must be negative.
• C) A portfolio with a large number of randomly selected stocks would have less market risk than a single stock that has a beta of 0.5.
• D) According to the CAPM, stocks with higher standard deviations of returns must also have higher expected returns.
• E) If the returns on two stocks are perfectly positively correlated and these stocks have identical standard deviations, an equally weighted portfolio of the two stocks will have a standard deviation that is less than that of the individual stocks.

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Definitions:

Insurance Policyholder

An individual or entity who owns an insurance policy and is entitled to coverage and benefits as specified in the policy agreement.

CHAMPVA

A health care benefits program managed by the Department of Veterans Affairs for the dependents of veterans who are permanently and totally disabled due to service-related conditions.

Service-Connected Disabilities

Disabilities that are recognized as being directly related to military service.

Coordination of Benefits (COB)

A process whereby insurance companies share costs and determine payment responsibilities when a person is covered under multiple insurance plans.