Stock a Has a Beta of 0

question 15

Multiple Choice

Stock A has a beta of 0.8, Stock B has a beta of 1.0, and Stock C has a beta of 1.2.Portfolio P has 1/3 of its value invested in each stock.Each stock has a standard deviation of 25%, and their returns are independent of one another, i.e., the correlation coefficients between each pair of stocks is zero.Assuming the market is in equilibrium, which of the following statements is CORRECT?

• A) Portfolio P's expected return is equal to the expected return on Stock A.
• B) Portfolio P's expected return is less than the expected return on Stock B.
• C) Portfolio P's expected return is equal to the expected return on Stock B.
• D) Portfolio P's expected return is greater than the expected return on Stock C.
• E) Portfolio P's expected return is greater than the expected return on Stock B.

---

Definitions:

Positive Emotions

Feelings that are characterized by pleasurable engagement with the environment, such as joy, gratitude, and contentment.

Job Satisfaction

The level of contentment or happiness an individual feels towards their job, based on various aspects like work environment, salary, and duties.

Job Performance

The degree to which an employee executes their assigned duties and responsibilities effectively and efficiently.

Complex Pattern

Complex pattern refers to a configuration or arrangement that is intricate and involves multiple interrelated elements, making it difficult to analyze or predict.