Which of the Following Statements Is CORRECT

question 6

Multiple Choice

Which of the following statements is CORRECT?

• A) Lower beta stocks have higher required returns.
• B) A stock's beta indicates its diversifiable risk.
• C) Diversifiable risk cannot be completely diversified away.
• D) Two securities with the same stand-alone risk must have the same betas.
• E) The slope of the security market line is equal to the market risk premium.

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Definitions:

Cost-Benefit Thinking

A system of thought that focuses on the consequences to one person or institution and then weighs the cost against the benefits of performing the action under scrutiny.

Small Business Owner

An individual who owns and operates a business that is smaller in size, typically identified by revenue, employees, or other criteria.

Ethic Of Ultimate Ends

A moral philosophy that evaluates actions by their consequences or ultimate outcomes, often associated with utilitarianism.

Max Weber

A German sociologist, economist, and political scientist known for his theory on the structure of authority and his insights on the development of capitalism.