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A Certain Stock Has a Beta of 1

Question 3

Multiple Choice

A certain stock has a beta of 1.5 and an expected return of 21 percent. This means:


A) the expected return of the stock is 1.5 times greater than the expected return of the market.
B) the stock will increase the risk of any portfolio.
C) the risk of the stock is 1.5 times greater than the risk of the market.
D) the expected return is too high for the level of risk of the stock.
E) the beta of the stock is 50 percent of the beta of the market.

Correct Answer:

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