Which of the Following Statements Is True About the Beta

question 62

Multiple Choice

Which of the following statements is true about the beta of a portfolio?

• A) If the beta of a portfolio doubles, its required return also doubles.
• B) If a stock has a negative beta, its required return is negative.
• C) Higher beta stocks 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 the beta of a stock is three, the stock's relevant risk is thrice as volatile as the market portfolio.

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