Stock a Has a Beta of 1

question 47

Multiple Choice

Stock A has a beta of 1.2 and a standard deviation of 25%.Stock B has a beta of 1.4 and a standard deviation of 20%.Portfolio AB was created by investing in a combination of Stocks A and B.Portfolio AB has a beta of 1.25 and a standard deviation of 18%.Which of the following statements is CORRECT?

• A) Stock A has more market risk than Portfolio AB.
• B) Stock A has more market risk than Stock B but less stand-alone risk.
• C) Portfolio AB has more money invested in Stock A than in Stock B.
• D) Portfolio AB has the same amount of money invested in each of the two stocks.
• E) Portfolio AB has more money invested in Stock B than in Stock A.

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Definitions:

CT

Computed Tomography, an imaging procedure that uses special x-ray equipment to create detailed pictures, or scans, of areas inside the body.

AP

stands for Anteroposterior, a term used in radiology to describe the direction of an X-ray beam from front to back.

Positron Emission Tomography

A nuclear medicine functional imaging technique used to observe metabolic processes in the body as an aid to the diagnosis of disease.

Orally

Pertaining to the mouth; a mode of medication administration or verbal communication.