Which of the Following Statements Is Most Correct

question 2

Multiple Choice

Which of the following statements is most correct?

• A) If beta doubles, the required return doubles.
• B) If a share has a negative beta, its required return is negative.
• C) Higher beta shares have more company-specific risk, but do not necessarily have more market risk.
• D) If a portfolio's beta increases from 1.2 to 1.5, its required rate of return will increase by an amount equal to its market risk premium.
• E) If two shares have the same standard deviation and the correlation coefficient between the returns of two shares equals zero, an equally weighted portfolio of the two shares will have a standard deviation lower than that of individual shares.

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Definitions:

Heals Well

Refers to the capacity of an organism, especially human skin and tissues, to recover from injuries or wounds effectively.

Scar

A mark left on the skin or within body tissue where a wound, burn, or sore has not healed completely and fibrous connective tissue has developed.

Granulation Tissue

The new vascular tissue formed in the healing of wounds, characterized by red, granular appearance due to the proliferation of capillaries.

Dense Irregular Collagenous Connective Tissue

A type of connective tissue with densely packed collagen fibers arranged in an irregular pattern, providing strength and flexibility to structures like the dermis of the skin.