Share A has a beta of 1.5 and Share B has a beta of 0.5.Which of the following statements must be true about these securities? (Assume the market is in equilibrium.)
A) When held in isolation, Share A has greater risk than Share B.
B) Share B would be a more desirable addition to a portfolio than Share A.
C) Share A would be a more desirable addition to a portfolio than Share B.
D) The expected return on Share A will be greater than that on Share B.
E) The expected return on Share B will be greater than that on Share A.
Correct Answer:
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