Stock A's Beta Is 1

question 3

Multiple Choice

Stock A's beta is 1.5 and Stock B's beta is 0.5. Which of the following statements must be true about these securities? (Assume market equilibrium.)

• A) When held in isolation, Stock A has greater risk than Stock B.
• B) Stock B must be a more desirable addition to a portfolio than Stock A.
• C) Stock A must be a more desirable addition to a portfolio than Stock B.
• D) The expected return on Stock A should be greater than that on Stock B.
• E) The expected return on Stock B should be greater than that on Stock A.

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Definitions:

Production Workers

Production workers are employees involved in the manufacturing process, directly contributing to the creation of products through tasks such as assembly, machining, and inspection.

Lean Business Model

A strategy focused on creating value for customers with minimal waste and resources, emphasizing flexibility and efficiency.

Multi-Dimensional Performance

An approach to evaluation that considers various aspects of performance, such as efficiency, effectiveness, and quality, across different domains or dimensions.

Just In Time

An inventory management strategy where materials and goods are produced or acquired only as needed for immediate use.