Which of the Following Statements Is CORRECT

question 92

Multiple Choice

Which of the following statements is CORRECT?

• A) 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.
• B) 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.
• C) If a stock has a negative beta,its expected return must be negative.
• D) 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.
• E) According to the CAPM,stocks with higher standard deviations of returns must also have higher expected returns.

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Definitions:

Hierarchy Culture

An organizational culture characterized by a structured setup where decisions follow a strict top-down approach, emphasizing control and defined roles.

Stability

is the state of being steady, consistent, and free from significant change or variation, often considered desirable in various contexts like economies, ecosystems, or personal lives.

Internal Focus

Refers to an organization's emphasis on its internal operations, processes, and employees, aiming to improve efficiency and work environment.

Competing Values Framework

A model used to assess and understand organizational culture by categorizing it into four quadrants based on flexibility, control, internal, and external focus.