Which of the Following Statements Is CORRECT

question 87

Multiple Choice

Which of the following statements is CORRECT?

• A) The slope of the security market line is equal to the market risk premium.
• B) Lower beta stocks have higher required returns.
• C) A stock's beta indicates its diversifiable risk.
• D) Diversifiable risk cannot be completely diversified away.
• E) Two securities with the same stand-alone risk must have the same betas.

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Definitions:

Materialistic Ideals

The belief that material wealth and physical possessions are the primary indicators of success or happiness.

Industrial Revolution

A period of major industrialization from the late 18th to early 19th century that transformed agriculture-based societies into industrialized ones.

Large Corporations

Very big companies or enterprises that operate in multiple markets, often globally, and have substantial revenues and assets.

Ethical Behavior

Acting in ways consistent with societal norms and values, including honesty, fairness, and integrity.