Which of the Following Statements Is Correct

question 67

Multiple Choice

Which of the following statements is correct?

• A)The beta of a portfolio of stocks is always smaller than the beta of any of the individual stocks.
• B)If you found a stock with a zero historical beta and held it as the only stock in your portfolio, you would by definition have a riskless portfolio.
• C)The beta coefficient of a stock is normally found by regressing past returns on a stock against past market returns. One could also construct a scatter diagram of returns on the stock versus those on the market, estimate the slope of the line of best fit, and use it as beta. However, this historical beta may differ from the beta that exists in the future.
• D)It is theoretically possible for a stock to have a beta of 1.0. If a stock did have a beta of 1.0, then, at least in theory, its required rate of return would be equal to the risk-free (default-free) rate of return, r_RF.

---

Definitions:

Written Medium

Any method or format that uses written words for communication, such as books, emails, or social media posts.

Electronic Forms

Digital versions of paper forms, designed to be filled out and submitted online or through electronic devices.

Detailed

Characterized by the inclusion of many specific features or elements.

Emotional Content

The expression of feelings and emotions within communication or media.