Stock A's beta is 1.7 and Stock B's beta is 0.7.Which of the following statements must be true about these securities? (Assume market equilibrium.)
A) Stock B must be a more desirable addition to a portfolio than A.
B) Stock A must be a more desirable addition to a portfolio than B.
C) The expected return on Stock A should be greater than that on B.
D) The expected return on Stock B should be greater than that on A.
E) When held in isolation, Stock A has more risk than Stock B.
Correct Answer:
Verified
Q54: The SML relates required returns to firms'
Q55: If markets are in equilibrium, which of
Q56: Your friend is considering adding one additional
Q57: Stock A's beta is 1.7 and Stock
Q58: If you plotted the returns of a
Q60: Consider the following average annual returns for
Q61: Ann has a portfolio of 20 average
Q62: If you randomly select stocks and add
Q63: Which of the following statements is CORRECT?
A)
Q64: In a portfolio of three randomly selected
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents