Which One of the Following Should Earn the Most Risk

question 18

Multiple Choice

Which one of the following should earn the most risk premium based on CAPM?

• A)diversified portfolio with returns similar to the overall market
• B)stock with a beta of 1.38
• C)stock with a beta of 0.74
• D)U.S. Treasury bill
• E)portfolio with a beta of 1.01

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Definitions:

Enantiomer

Molecules that are mirror images of each other but cannot be superimposed onto each other, usually involving chiral centers.

Molecule

The tiniest unit of a chemical substance that maintains both the substance's composition and its chemical characteristics, and can exist on its own.

Enantiomers

Molecules that are mirror images of each other but cannot be superimposed, much like left and right hands.

Separated

To cause to move or be apart; in a scientific context, often refers to the process of dividing or isolating components based on their physical or chemical properties.