Which of the Following Statements Is Most Correct

question 29

Multiple Choice

Which of the following statements is most correct?

• A) If beta doubles,the required return doubles.
• B) If a stock has a negative beta,its required return is negative.
• C) Higher beta stocks have more company-specific risk,but do not necessarily have more market risk.
• D) If a portfolio's beta increases from 1.2 to 1.5,its required rate of return will increase by an amount equal to its market risk premium.
• E) If two stocks have the same standard deviation and the correlation coefficient between the returns of two stocks equals zero,an equally weighted portfolio of the two stocks will have a standard deviation lower than that of the individual stocks.

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Definitions:

No-Pill Condition

A scenario often used in experimental studies where participants are given no medication as a control group to compare the effects of a drug or treatment.

Physical Punishment

The use of physical force with the intention of causing a child to experience pain, but not injury, for purposes of correction or control.

Cross-Cultural Study

A research approach that compares cultural contexts to understand their influences on human behavior, practices, and beliefs, seeking to identify both universalities and cultural specificities.

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