2 poi QUESTION 9 Which of the following statement is correct? A stock's beta is the difference between it return and the return on the market portfolio Beta equals the slope of the line fitted to a plot of a stock's returns versus the market returns Investor can adjust the risk of portfolio by choosing stocks with different market risk premium Beta measures the market risk premium on the stock 5 poi QUESTION 10 On 3/31/2020, Company ABC released its quarterly report, showing the sales in the first quarter had tumbled 30% as pandemic hit. However, the stock price for company ABC went up by 3% right after the report was released. Does this mean a failure for the Market Efficient Theory? Patn: P words:0 9 poi QUESTION 11 Consider 2 scenarios: Boom Economy and Normal Economy. The Boom economy has 20% chance of happening, while Normal economy has 80% chance of happening. For each scenario (Boom and Normal), stock ABC has a return of 25%, and 4%, respectively; stock XYZ has a return of 10% and 6.5%, respectively; the market portfolio has a return of 12% and 5% respectively. 1) Calculate Expected return, Variance and Standard deviation for stock ABC and XYZ 2) Based on your results in part (1), can you decide which stock to invest? 3) Calculate Beta for stock ABC and XYZ 4) If the T-bill rate is 3%, what does the CAPM say about the fair expected rate of return on the two stocks? How does this result influence your investment decision? EMA Path: P Words:0