4. Stock A's beta is 1.5 and Stock B's beta is 0.5 . Which of the following statements must be true, assuming the CAPM is correct. A. Stock A is riskier to hold than Stock B. B. Stock A pays a higher risk premium than stock B. C. Stock B would be a better choice to add to a portfolio than A. D. The systematic risk of stock B is higher than stock A. 5. During the coming year, the market risk premium ( rMMrRFR ), is expected to rise, while the risk-free rate, rRf, is expected to remain the same. The systematic risk of all stocks remains unchanged. Given this forecast, which of the following statements is CORRECT? A. The required return will decrease for stocks with a beta less than 1.0 and will increase for stocks with a beta greater than 1.0. B. The required return on all stocks will remain unchanged. C. The required return will increase for all stocks, but it will increase more for stocks with higher betas. D. The required return will increase for all stocks, but it will increase less for stocks with higher betas. 6. Which of the following statements is CORRECT? A. Sharpe ratio is equal to the slope of the capital market line. B. Whenever the risk-free rate increases, the market risk premium will also increase. C. If thzompany's beta is halved, its expected stock return will also be halved. D. The slope of the capital allocation line is equal to the market return. 7. Which of the following statements is CORRECT? A. The risk that remains in a fully diversified portfolio is systematic risk, which is constant for all stocks in the market. B. Portfolio diversification reduces the firm-specific risk in a nonlinear manner. C. Risk refers to the chance that some unfavorable event will occur. D. A stock with a beta of zero has zero total risk. 8. The term complete portfolio refers to a portfolio consisting of A. the risk-free asset combined with the minimum-variance portfolio B. the risk-free asset combined with a risky portfolio C. common stocks combined with bonds D. securities from domestic markets combined with securities from foreign markets