Stock X Has a Lower Beta Than Stock Y

question 26

Multiple Choice

Stock X has a lower beta than Stock Y. The market return for next month is expected to be either -1 percent, +1 percent, or +2 percent with an equal probability of each scenario. The probability distribution of Stock X returns for next month is

• A)the same as that of Stock Y.
• B)more dispersed than that of Stock Y.
• C)less dispersed than that of Stock Y.
• D)zero.

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Definitions:

Subliminal Priming

The use of stimuli below the threshold of conscious perception to influence thoughts or actions.

Stimuli

External agents or occurrences that cause a reaction or response in an organism or any of its parts.

Sensory Adaptation

The process by which sensory receptors become less responsive to constant stimuli, leading to a decrease in sensitivity.

Masking Stimulus

A stimulus that inhibits the perception of another stimulus, making it difficult or impossible to process on a conscious level.