13. As a result of your research, your expected r te of return on GE stock is 20% The risk-free interest rate is 1% and the required return on the market indes is 10% GE's beta is 1.8. According to the Capital asset pricing Model A. you should purchase this stock B. the market is not in equilibrium C. GE's historical rate of return is 80% more volatile than average D. all of the above 14. Which of the following financial assets historically has had the largest standard deviation? A. common stock B. U.S. Treasury Bill C. 20-year industrial bonds D. commercial paper 15. A diversified portfolio of U.S stocks should have A. market risk only B. unique risk only C. both market and unique risk D. no risk 16. Stock Y has a beta of 1.6. The risk-free interest rate is 2%, while the market required return is 12%. Stock Y's risk premium is A, 10% B.16% C. 19.2% D. none of the above; the correct answer is 17. Perfectly correlated series move exactly together and have a correlation coefficient of while perfectly correlated series move exactly in opposite directions and have a correlation coefficient of A. negatively: -1; positively:+1 B. negatively: +1; positively; -1 C. positively; -1; negatively: +1 D. positively; +1; negatively: -1 18. Select the incorrect statement regarding the beta A. B. C. D. The beta for the market is 1 The lower a stock's beta, the lower should be its required rate of return Beta measures the diversifiable risk of a security Most stocks have positive betas 19The DJIA is a measure of A. The market index of 30 large blue chip stocks B. The market index of 500 stocks included in Standard & Poor C. The market index of NYSE traded stocks D. The market index of 2000 small stock prices PAGE 30