You Expect General Motors (GM) to Have a Beta of 1

question 86

Multiple Choice

You expect General Motors (GM) to have a beta of 1 over the next year and the beta of Exxon Mobil (XOM) to be 1.2 over the next year. Also, you expect the volatility of General Motors to be 30% and that of Exxon Mobil to be 40% over the next year. Which stock has more systematic risk? Which stock has more total risk?

• A) GM, GM
• B) GM, XOM
• C) XOM, XOM
• D) XOM, GM

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Definitions:

Mechanical Breakdown

The physical process of breaking food into smaller pieces, an essential part of digestion.

Chemical Digestion

The process of breaking down food in the gut into smaller components, using enzymes, so they can be absorbed into the body.

Common Hepatic Duct

A duct in the liver that conveys bile from the liver to the cystic duct and then to the gallbladder.

Bile

Bile is a digestive fluid produced by the liver and stored in the gallbladder that aids in the digestion and absorption of fats in the small intestine.