Stock A's Beta Is 1

question 96

Multiple Choice

Stock A's beta is 1.5 and Stock B's beta is 0.5.Which of the following statements must be true,assuming the CAPM is correct?

• A)Stock A would be a more desirable addition to a portfolio than Stock B.
• B)In equilibrium, the expected return on Stock B will be greater than that on Stock A.
• C)Stock B would be a more desirable addition to a portfolio than Stock A.
• D)In equilibrium, the expected return on Stock A will be greater than that on Stock B.

---

Definitions:

Hormones

Chemical messengers secreted by glands in the body, transported in the bloodstream to target organs or tissues, where they exert specific effects.

Coordinated Solution

A comprehensive approach to problem-solving that involves the integration and alignment of multiple strategies or components.

Supply Chain Profit

The total profit generated through all stages of the supply chain, from raw material sourcing to the final sale of the product.

Independent Pricing

The practice where prices for goods or services are set independently by each entity without coordination with others, often in competitive markets.