Which of the Following Statements Is CORRECT

question 97

Multiple Choice

Which of the following statements is CORRECT?

• A) The beta of a portfolio of stocks is always smaller than the betas of any of the individual stocks.
• B) If you found a stock with a zero historical beta and held it as the only stock in your portfolio, you would by definition have a riskless portfolio.
• C) The beta coefficient of a stock is normally found by regressing past returns on a stock against past market returns. One could also construct a scatter diagram of returns on the stock versus those on the market, estimate the slope of the line of best fit, and use it as beta. However, this historical beta may differ from the beta that exists in the future.
• D) The beta of a portfolio of stocks is always larger than the betas of any of the individual stocks.
• E) It is theoretically possible for a stock to have a beta of 1.0. If a stock did have a beta of 1.0, then, at least in theory, its required rate of return would be equal to the risk-free (default-free) rate of return, rRF.

---

Definitions:

Anatomical Sex

The biological classification of bodies as male, female, or intersex based on physical attributes such as chromosomes, hormones, and reproductive organs.

Physical and Mental Ability

Refers to the combination of bodily functions and cognitive skills that enable an individual to perform tasks and engage in everyday activities.

Nonanatomical Signs

Indicators or symptoms related to health conditions that are not directly linked to the body's structures or anatomy.

Facial Features and Musculature

The distinctive parts of the face, such as the eyes, nose, and mouth, and the underlying muscle structure that supports and moves them.