Consider the Following Information for Three Stocks, A, B, and C

question 70

Multiple Choice

Consider the following information for three stocks, A, B, and C. The stocks' returns are positively but not perfectly positively correlated with one another, i.e., the correlations are all between 0 and 1.
$\begin{array}{cccc}\text { Stock } & \begin{array}{c}\text { Expected } \\\text { Return }\end{array} & \begin{array}{c}\text { Standard } \\\text { Deviation }\end{array} & \text { Beta } \\\mathrm{A} & 10 \% & 20 \% & 1.0 \\\mathrm{~B} & 10 \% & 10 \% & 1.0 \\\mathrm{C} & 12 \% & 17 \% & 1.4\end{array}$
Portfolio AB has half of its funds invested in Stock A and half in Stock B. Portfolio ABC has one third of its funds invested in each of the three stocks. The risk-free rate is 5%, and the market is in equilibrium, so required returns equal expected returns. Which of the following statements is CORRECT?

• A) portfolio ab's coefficient of variation is greater than 2.0.
• B) portfolio ab's required return is greater than the required return on stock a.
• C) portfolio abc's expected return is 10.66667%.
• D) portfolio abc has a standard deviation of 20%.
• E) portfolio ab has a standard deviation of 20%.

Understand the impact of cognitive distortions like arbitrary inference, selective thinking, and overgeneralization on personal beliefs and behaviors.

Recognize the utility of group, family, and individual therapy formats for specific client needs.

Familiarize with the concept and application of cognitive-behavioral therapy.

Comprehend the principles of rational emotive behavior therapy and its focus on challenging and changing irrational beliefs.

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Definitions:

Locus of Control

An individual’s belief about the extent to which their actions influence the outcomes or events in their lives.

Learned Helplessness

A condition in which a person suffers from a sense of powerlessness, arising from traumatic events or persistent failure to succeed.

External Locus of Control

The belief that one's life events are largely influenced by external forces or other people, rather than one's own efforts.

Achievement Tests

Standardized tests designed to evaluate a person's knowledge or proficiency in a specific area or subject.