Stock a Has a Beta = 0

question 36

Multiple Choice

Stock A has a beta = 0.8,while Stock B has a beta = 1.6.Which of the following statements is correct?

• A)Stock B's required return is double that of Stock A's.
• B)If the marginal investor becomes more risk averse, the required return on Stock B will increase by more than the required return on Stock A.
• C)An equally weighted portfolio of Stocks A and B will have a beta lower than 1.2.
• D)If the risk-free rate increases but the market risk premium remains constant, the required return on Stock A will increase by more than that on Stock B.

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The quality of being logically united and consistent, making the parts of a text or argument fit together smoothly.

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