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:

Discrete Metric

A way of quantifying the difference between elements in a dataset where the data points are distinct and separate.

Counting

The action of determining the total number of objects or entities in a collection or group.

Workforce-focused

Pertaining to strategies, policies, or practices that are centered on the workforce, aiming to improve employee satisfaction, skill development, and productivity.

Leadership Development

A systematic approach to expanding the leadership abilities and skills of individuals within an organization or team.