In a given portfolio, replacing an existing investment with a lower beta investment results in _____.

a.a decrease in the required rate of return of the portfolio

b.an increase in the systematic risk of the portfolio

c.a decrease in the actual rate of return of the portfolio

d.an increase in the expected rate of rate return of the portfolio

e.the portfolio beta moving toward 1.0

Which of the following statements about beta is correct?

a.A stock's standard deviation of returns is a measure of the stock's stand-alone risk, while its beta measures its unsystematic risk.

b.If the returns on a stock vary widely, then its standard deviation is large, and as a result, the stock will also have a large beta coefficient.

c.A stock with a negative beta has very high firm-specific risk.

d.A stock that is perfectly positively correlated with the market would not have a beta coefficient that is greater than one.

e.A portfolio that contains 100 high-beta stocks will not be riskier than a portfolio containing 100 low-beta stocks.

The standard deviation of the returns of Stock A is 45.85%, and the standard deviation of the returns of Stock B is 52.7%. Which of the following statements about the stocks is correct?

a.Stock A has tighter probability distribution, and hence lower total risk.

b.Stock B has lower risk, but nothing can be said about the probability distribution.

c.Stock A has less tight probability distribution, and hence lower total risk.

d.Stock B has tighter probability distribution, and hence lower total risk.

e.Stock B has less tight probability distribution, and hence lower total risk.