Which of the Following Statements Is CORRECT

question 24

Multiple Choice

Which of the following statements is CORRECT?

• A) 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.
• B) 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.
• C) The beta of a portfolio of stocks is always larger than the betas of any of the individual stocks.
• 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.
• E) The beta of a portfolio of stocks is always smaller than the betas of any of the individual stocks.

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Definitions:

Attitudes Toward Hierarchy

The way individuals perceive and react to the levels of structure and authority within an organization or society.

Marketing Advantage

The edge a company gains over its competitors by offering greater customer value, either through lower prices or by providing more benefits that justify higher prices.

Workforce Blending

The practice of combining traditional and non-traditional workers (like permanent, temporary, or contract workers) to meet the needs of the business.