Security a Is Expected to Return 12% According to CAPM;

question 7

Multiple Choice

Security A is expected to return 12% according to CAPM; Security B is expected to return 15% according to CAPM. Which of the following statements is (are) true?

• A)Security A must have a higher degree of total risk than Security B.
• B)Security B must have a higher degree of market risk than Security A.
• C)Security B is a better investment than Security A since it offers a higher return.
• D)Both A and C are true.

---

Definitions:

Beeping Sound

A type of auditory signal or notification often used by devices to attract attention or indicate an alert.

Electric Shock

A sudden discharge of electricity through a part of the body causing injury or neurological disturbance.

Extinction

In psychology, the gradual weakening and disappearance of a conditioned response, typically as a result of the conditioned stimulus being presented without reinforcement.

Classical Conditioning

A learning process in which a neutral stimulus comes to elicit a response after being paired with a stimulus that naturally elicits that response.