Security a Has a Greater Level of Systematic Risk Than

question 15

Multiple Choice

Security A has a greater level of systematic risk than security B.The expected equilibrium return for A must be greater than that for B because:

• A) B's price will fall as investors realize that B offers lower returns.
• B) if it is not, then A's price will fall and B's price will rise as investors sell A and buy B.
• C) the Security Market Line is negatively sloped.
• D) the standard deviation of A's return is greater than B's.

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