In the CAPM, If a Stock Has a Large Beta

question 12

Multiple Choice

In the CAPM, if a stock has a large beta coefficient, then

• A)the stock's return is less volatile than the market's average return.
• B)the stock's return is about as volatile as the market's average return.
• C)the stock's return is more volatile than the market's average return.
• D)the stock's risk is greater than its expected return.

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Definitions:

Symptoms

Physical or mental features that are regarded as indicating a condition or disease.

Long-Term

Relating to or happening over an extended period, potentially involving prolonged influences or effects on a particular domain such as memory, planning, or investment.

Psychological Effects

Concerns the impacts or changes in behavior, thought, or emotions stemming from a particular event or situation.

Physical Effects

Observable changes or impacts on the body resulting from various causes, such as exercise, drug use, or environmental factors.