Share a Has a Beta of 1

question 10

Multiple Choice

Share A has a beta of 1.5 and Share B has a beta of 0.5.Which of the following statements must be true about these securities? (Assume the market is in equilibrium.)

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

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Definitions:

Multichannel

Multichannel refers to the use of multiple means or platforms to interact with consumers or conduct business, including physical locations and online presence.

Single Phase

Refers to a one-stage process or an electrical power supply that involves only one alternating waveform.

Multiphase

Pertaining to a process or system that involves several distinct stages or phases.

Queuing Situation

A scenario where entities wait in line for a service or resource, leading to analysis for efficient management of waiting times and service processes.