Question
Harry Potter has Stock in Magic Wands that has a beta of 2.5 and he has Stock in Magic Stones with a beta of 0.75.
Harry Potter has Stock in Magic Wands that has a beta of 2.5 and he has Stock in Magic Stones with a beta of 0.75.
Which of the following statements must be true about his securities in stock? (Assume the market is in equilibrium.)
Stock in Stones must be a more desirable addition to a portfolio than Stock in Wands.
Stock in Wands must be a more desirable addition to a portfolio than Stock in Stones.
The expected return on stock in Wands should be greater than that on Stock in Stones.
The expected return on stocks in Stones should be greater than that on Stock in Wands.
When the stock is held by itself, Stock in Wands has a greater risk than Stock in Stones.
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International financial management
Authors: Jeff Madura
9th Edition
978-0324593495, 324568207, 324568193, 032459349X, 9780324568202, 9780324568196, 978-0324593471
