Which One of the Following Statements Is Correct

question 415

Multiple Choice

Which one of the following statements is correct?

• A) A beta of 1.2 indicates that a security has less risk than the overall market.
• B) Treasury bills have a beta of zero.
• C) A stock with a beta of 1.4 has less systematic risk than a stock with a beta of .9.
• D) The risk premium associated with a stock will decrease as the beta of the stock increases.
• E) The beta of a diversified portfolio will approach zero as the number of stocks in the portfolio is increased.

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Definitions:

Passivity

A behavior characterized by inactivity or the lack of response to external stimuli or events, often resulting in acceptance of circumstances without resistance or attempt to initiate change.

Karl Marx

A 19th-century philosopher, economist, and political theorist known for his critique of capitalism and his advocacy for communism as an alternative.

Circumstances

The specific conditions or factors affecting a situation, event, or decision at a given time.

Christianity

A monotheistic religion based on the life and teachings of Jesus Christ, emphasizing love, redemption, and forgiveness.