Stocks a and B Each Have an Expected Return of 12%,a

question 147

Multiple Choice

Stocks A and B each have an expected return of 12%,a beta of 1.2,and a standard deviation of 25%.The returns on the two stocks have a correlation of +0.6.Portfolio P has 50% in Stock A and 50% in Stock B.Which of the following statements is CORRECT?

• A) Portfolio P has a beta that is greater than 1.2.
• B) Portfolio P has a standard deviation that is greater than 25%.
• C) Portfolio P has an expected return that is less than 12%.
• D) Portfolio P has a standard deviation that is less than 25%.
• E) Portfolio P has a beta that is less than 1.2.

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Definitions:

Anticompetitive Behavior

Actions by a business that prevent or reduce competition in a market.

Monopolization

refers to the domination by a single company of a particular market, often regarded negatively because it can restrict competition and harm consumers.

Market Power

Refers to the ability of a company to influence the price and production levels in a market due to its size or lack of competition.

Antitrust Laws

Legislation to promote fair competition for the benefit of consumers, by regulating anti-competitive conduct by companies.