Stock A's Beta Is 1

question 139

Multiple Choice

Stock A's beta is 1.7 and Stock B's beta is 0.7. Which of the following statements must be true about these securitiesσ (Assume market equilibrium.)

• A) stock b must be a more desirable addition to a portfolio than a.
• B) stock a must be a more desirable addition to a portfolio than b.
• C) the expected return on stock a should be greater than that on b.
• D) the expected return on stock b should be greater than that on a.
• E) when held in isolation, stock a has more risk than stock b.

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