Stock X Has a Beta of 0

question 16

Multiple Choice

Stock X has a beta of 0.7 and Stock Y has a beta of 1.3. The standard deviation of each stock's returns is 20%. The stocks' returns are independent of each other, i.e., the correlation coefficient, r, between them is zero. Portfolio P consists of 50% X and 50% Y. Given this information, which of the following statements is CORRECT?

• A) Portfolio P has a standard deviation of 20%.
• B) The required return on Portfolio P is equal to the market risk premium (rM − rRF).
• C) Portfolio P has a beta of 0.7.
• D) Portfolio P has a beta of 1.0 and a required return that is equal to the riskless rate, rRF.
• E) Portfolio P has the same required return as the market (rM).

Evaluate the logical outcome of complex statements involving negation.

Determine the truth value of a statement given the truth values of its components.

Distinguish between the logical implications of having at least one versus all components meeting a specific condition (tautology, self-contradiction, or contingency).

Apply logical principles to evaluate the validity of arguments and the integrity of statements.

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Definitions:

Sacred Form

An object, design, or structure treated with reverence or considered holy within a particular spiritual or religious context.

Masonry Temple

A religious building constructed using stone, bricks, or other masonry units, characterized by its durability and often historic architectural styles.

Hindu God

A deity or divine figure worshipped in Hinduism, of which there are many, each with their own roles, stories, and symbolism within the religion.

Stepped Pyramid

A pyramid structure with sides that rise in a series of giant steps, characteristic of ancient Mesopotamian and Egyptian architecture.