An Equity Security with Systematic Risk Equal to the Average

question 14

Multiple Choice

An equity security with systematic risk equal to the average amount of systematic risk of all equity securities in the market:

• A) has a market beta equal to one.
• B) should expect to earn the same rate of return as the average stock in the market portfolio.
• C) gives no insight into the risk premium of stock.
• D) Both " has a market beta equal to one" and " should expect to earn the same rate of return as the average stock in the market portfolio"  are correct.

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Definitions:

Carbon-13:Carbon-12

This ratio is used in scientific studies to understand various processes such as photosynthesis and to trace the path of carbon through ecosystems due to the distinct signatures of carbon-13 and carbon-12.

Hominin Diet

The range of foods consumed by human ancestors and relatives, which varied significantly over time and with environmental conditions.

Grasses

A large and diverse family of plants, known scientifically as Poaceae, which includes wheat, corn, and rice, and is characterized by narrow leaves growing from the base.

Synapsids

A group of animals that includes mammals and their extinct relatives, characterized by a single temporal fenestra (an opening in the skull behind each eye).