Stock a Has a Beta of 1

question 24

Multiple Choice

Stock A has a beta of 1.2 and a standard deviation of returns of 18%.Stock B has a beta of 1.8 and a standard deviation of returns of 18%.If the market risk premium increases,then

• A) the required return on stock B will increase more than the required return on stock A.
• B) the required returns on stocks A and B will both increase by the same amount.
• C) the required returns on stocks A and B will remain the same.
• D) the required return on stock A will increase more than the required return on stock B.

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Definitions:

Service Time Probabilities

The likelihood of various durations that a service might take, often used in queueing theory to predict waiting times.

Service Level

The complement of the probability of a stockout.

Cost Of Waiting

The potential loss incurred by delaying decisions or actions, often used in queueing theory and service management.

Balk

The action taken by customers who decide not to enter a queue or a service system because it appears too long or slow.