Stock a Has a Beta = 0

question 128

Multiple Choice

Stock A has a beta = 0.8, while Stock B has a beta = 1.6. Which of the following statements is CORRECT?

• A) Stock B's required return is double that of Stock A's.
• B) If the marginal investor becomes more risk averse, the required return on Stock B will increase by more than the required return on Stock A.
• C) An equally weighted portfolio of Stocks A and B will have a beta lower than 1.2.
• D) If the marginal investor becomes more risk averse, the required return on Stock A will increase by more than the required return on Stock B.

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Definitions:

Variable-Interval

In the context of operant conditioning, a schedule of reinforcement where a response is rewarded after an unpredictable amount of time has passed.

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The appearance of the sky after sunset, characterized by darkness interspersed with celestial objects such as stars, planets, and the moon.

Aversive Stimulus

An unpleasant or noxious stimulus used to influence behavior through negative reinforcement or punishment.