If Two Stocks Had the Same Beta, but Stock a Had

question 46

Essay

If two stocks had the same beta, but Stock A had high non-systematic risk and Stock B had low non-systematic risk, would rational investors expect a higher return from holding one of these securities?

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Definitions:

Dodd-Frank Act

U.S. legislation passed in 2010 aimed at promoting financial stability by improving accountability and transparency in the financial system, named after sponsors Senator Chris Dodd and Representative Barney Frank.

Aiding and Abetting

The act of assisting or facilitating another person in the commission of a crime.

Senior Executives

High-level managers within an organization, responsible for strategic decision-making and overseeing operational activities.

Penny Stock Reform Act

U.S. legislation aimed at increasing the transparency and regulate the trading practices of low-priced, speculative stocks, often known as "penny stocks."