A Certain Stock Has a Beta of 1

question 6

Multiple Choice

A certain stock has a beta of 1.5 and an expected return of 21 percent. This means:

• A) the expected return of the stock is 1.5 times greater than the expected return of the market.
• B) the stock will increase the risk of any portfolio.
• C) the risk of the stock is 1.5 times greater than the risk of the market.
• D) the expected return is too high for the level of risk of the stock.
• E) the beta of the stock is 50 percent of the beta of the market.

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