You Expect General Motors (GM)to Have a Beta of 1

question 49

Multiple Choice

You expect General Motors (GM) to have a beta of 1.3 over the next year and the beta of Exxon Mobil (XOM) to be 0.9 over the next year.Also,you expect the volatility of General Motors to be 40% and that of Exxon Mobil to be 30% over the next year.Which stock has more systematic risk? Which stock has more total risk?

• A)XOM,GM
• B)XOM,XOM
• C)GM,XOM
• D)GM,GM
• E)They both have the same risks.

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Definitions:

Anterograde Amnesia

is a condition where an individual is unable to form new memories following an event that caused the amnesia, despite retaining memories from before the event.

Retrograde Amnesia

A condition where a person loses memories prior to a specific event, usually a trauma or injury, but retains the ability to form new memories.

Proactive Interference

The tendency for older memories to interfere with the retrieval of newer memories, often hindering learning and recall.

Procedural Memories

A type of long-term memory that enables people to learn and perform tasks without conscious awareness, often referred to as the memory for how things are done.