You Expect General Motors (GM) to Have a Beta of 1.5

question 58

Multiple Choice

You expect General Motors (GM) to have a beta of 1.5 over the next year and the beta of Exxon Mobil (XOM) to be 1.9 over the next year. Also, you expect the volatility of General Motors to be 50% and that of Exxon Mobil to be 35% over the next year. Which stock has more systematic risk? Which stock has more total risk?

• A) XOM, GM
• B) GM, XOM
• C) GM, GM
• D) XOM, XOM

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Definitions:

Organizational Psychologist

A professional who applies psychological theories and principles to organizations, focusing on improving workplace productivity, and the mental health of employees.

Testable Prediction

A hypothesis or forecast that can be verified through experimentation or observation.

Hypothesis

A proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Theory

An explanation or set of principles that has been formulated to explain phenomena, often based on general principles independent of the phenomena to be explained.