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.

---

Definitions:

Law Of Supply

A fundamental principle stating that, all else equal, an increase in price results in an increase in quantity supplied.

Upward Slope

A graphical representation in which a line or curve moves higher as it progresses from left to right, indicating an increase in the variable being measured.

Price Of Gasoline

The amount of money charged per unit volume of gasoline, affected by factors such as crude oil prices, taxes, supply, and demand.

Price Of Oil

The cost per barrel of crude oil as determined by global markets.