Stock A's Beta Is 1

question 113

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, assuming the CAPM is correct.

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

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Definitions:

Code Assigned

Refers to specific numerical or alphabetical codes designated for diagnosis, procedures, or other medical classifications in healthcare documentation.

Patent Ductus Arteriosus

A congenital heart defect where a fetal blood vessel doesn't close properly after birth, affecting normal blood flow.

Respiratory Distress Syndrome

A serious condition that affects premature babies, causing breathing difficulties due to underdeveloped lungs.

Premature Infant

An infant born before completing 37 weeks of gestation, often facing potential health challenges due to underdeveloped organs.