Consider the Following Information for Three Stocks, A, B, and C

question 74

Multiple Choice

Consider the following information for three stocks, A, B, and C. The stocks' returns are positively but not perfectly positively correlated with one another, i.e., the correlations are all between 0 and 1. $\begin{array}{llcc}&\text { Expected }&\text {Standard }\\\underline{ \text { Stock }}&\underline{ \text { Return }}&\underline{ \text { Deviation} }&\underline{ \text { Beta} }\\\text { A } & 10 \% & 20 \% & 1.0\\ \text {B} & 10 \% & 10 \% & 1.0 \\\text { C } & 12 \% & 12 \% & 1.4 \end{array}$

Portfolio AB has half of its funds invested in Stock A and half in Stock B. Portfolio ABC has one third of its funds invested in each of the three stocks. The risk-free rate is 5%, and the market is in equilibrium, so required returns equal expected returns. Which of the following statements is CORRECT?

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Referring to the period or stage of life immediately following puberty, when secondary sexual characteristics have developed.

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Illegal or antisocial behaviors carried out by individuals under the age of majority.