Consider the following information

Stock	Standard Deviation	Beta
A	40%	1.30
B	35%	1.20
C	47%	1.25

Which stock should have higher expected return?

Group of answer choices

A

C

B

Question 2

Which of the following is TRUE?

I. For well-diversified portfolios, unsystematic risk is very large.

II. The total risk for a diversified portfolio is very similar to unsystematic risk.

Group of answer choices

I only

II only

I and II

Neither I nor II

Question 3

Which of the following is TRUE about CAPM?

I. If an asset has a beta = 0, the expected return is zero.

II. If an asset has a beta = 1.2, market return = 15% and risk-free rate = 5%, the expected return is 19%.

Group of answer choices

Neither I nor II

II only

I and II

I only

Question 4

Asset X has a beta of 0.9. The market risk premium is 10% and the risk-free rate is 4%.

Based on your own forecast, Asset X would offer you a return of 12%. Would you buy or sell this stock?

[ Hint: consider whether asset X is above or below SML ]

Group of answer choices

buy

sell

Question 5

According to the video, on average, Target has a ______________ beta than Walmart; and Facebook has a _____________ beta than Amazon.

Group of answer choices

higher; lower

lower; lower

lower; higher

higher; higher