Stocks a and B Both Have an Expected Return of 10

question 21

Multiple Choice

Stocks A and B both have an expected return of 10% and a standard deviation of returns of 25%.Stock A has a beta of 0.8 and Stock B has a beta of 1.2.The correlation coefficient,r,between the two stocks is +0.6.Portfolio P has 50% invested in Stock A and 50% invested in B.Which of the following statements is CORRECT?

• A) Portfolio P has a standard deviation of 25% and a beta of 1.0.
• B) Based on the information we are given,and assuming those are the views of the marginal investor,it is apparent that the two stocks are in equilibrium.
• C) Portfolio P has more market risk than Stock A but less market risk than B.
• D) Stock A should have a higher expected return than Stock B as viewed by the marginal investor.
• E) Portfolio P has a coefficient of variation equal to 2.5.

Understand the purpose and process of recording adjusting entries in the accounting cycle.

Identify and prepare journal entries for various types of adjusting entries including prepayments, accruals, and depreciation.

Analyze the impact of omitted adjusting entries on financial statements.

Prepare adjusted trial balances and understand their role in the preparation of financial statements.

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Definitions:

Low

Typically refers to something being in a minimal or deficient in quantity, degree, or intensity.

Confusion

A state of being bewildered or unclear in one's mind about something, often resulting from lack of understanding or clear thinking.

Fever

An increase in body temperature above the normal range, often due to an underlying illness or infection.

Breast Examination

A clinical procedure conducted to detect abnormalities in the breast tissue, often used for cancer screening.