If Stock a Has a Higher Expected Return Than Stock

question 65

Multiple Choice

If Stock A has a higher expected return than Stock B,which of the following statements is most likely?

• A) Stock A has more specific risk.
• B) Stock B plots below the security market line.
• C) Stock B is a cyclical stock.
• D) Stock A has a higher beta.

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Definitions:

Ordinary Maintenance

Ordinary maintenance involves the routine upkeep and repairs necessary to maintain assets in their current condition, without significantly enhancing their value or extending their life.

Asset Improvements

Expenditures made to increase the service life, operating efficiency, or productive capacity of an asset.

Ordinary Maintenance

Routine upkeep and repairs to keep equipment and facilities in working order, as opposed to major renovations or upgrades.

Accumulated Depreciation

The total amount by which an asset's value has been written down over time to reflect wear, tear, or obsolescence.