Imposing the No-Arbitrage Condition on a Single-Factor Security Market Implies

question 4

Multiple Choice

Imposing the no-arbitrage condition on a single-factor security market implies which of the following statements?
I.the expected return-beta relationship is maintained for all but a small number of well-diversified portfolios.
II.the expected return-beta relationship is maintained for all well-diversified portfolios.
III.the expected return-beta relationship is maintained for all but a small number of individual securities.
IV.the expected return-beta relationship is maintained for all individual securities.

• A)I and III are correct.
• B)I and IV are correct.
• C)II and III are correct.
• D)II and IV are correct.
• E)Only I is correct.

---

Definitions:

Vivid Dream

A dream with intense, lifelike imagery, emotions, and sensory experiences.

Light-Sensitive Proteins

Proteins in photoreceptor cells that respond to light and are crucial for vision.

Retinas

The light-sensitive layer of tissue at the back of the eye that converts light rays into neural signals that are sent to the brain for visual recognition.

Melatonin

A hormone that regulates the sleep-wake cycle, produced by the pineal gland in response to darkness.