Stock a Has a Beta of 1

question 95

Multiple Choice

Stock A has a beta of 1.2 and a standard deviation of 25%.Stock B has a beta of 1.4 and a standard deviation of 20%.Portfolio AB was created by investing in a combination of Stocks A and B.Portfolio AB has a beta of 1.25 and a standard deviation of 18%.Which of the following statements is correct?

• A)Stock A has more market risk than Portfolio AB.
• B)Stock A has more market risk than Stock B but less stand-alone risk.
• C)Portfolio AB has more money invested in Stock A than in stock B.
• D)Portfolio AB has the same amount of money invested in each of the two stocks.

---

Definitions:

Technical Support Requirements

Specifications that detail the technical assistance and resources needed by users or customers for products or services.

RFP

Request for Proposal; a document that announces and provides details about a project, inviting suppliers to bid to complete it.

Latitude

The angular distance of a place north or south of the earth's equator, typically expressed in degrees and minutes.

Credibility

The quality of being trusted and believed in, often associated with accuracy and reliability.