Question
Stock A has beta of 1.5 and the variance of its return is 0.4. Stock B has a beta of 2 and the variance of
Stock A has beta of 1.5 and the variance of its return is 0.4. Stock B has a beta of 2 and the variance of its return is 0.3. Which of the following is true?
According to CAPM, stock A should have the same expected rate of return as stock B
Stock A has more unique risk than stock B
Stock B has more unique risk than stock A.
Investors will demand a higher return for stock A because it is the riskier one.
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De Gruyter Handbook Of Personal Finance
Authors: Grable, John E., Chatterjee, Swarn
1st Edition
3110727498, 978-3110727494
