Question
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'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 would be a more desirable addition to a portfolio then Stock B. |
|
|
|
| b. | In equilibrium, the expected return on Stock B will be greater than that on Stock A. |
|
|
|
| c. | When held in isolation, Stock A has more risk than Stock B. |
|
|
|
| d. | Stock B would be a more desirable addition to a portfolio than A. |
|
|
|
| e. | In equilibrium, the expected return on Stock A will be greater than that on B |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Emotions In Finance Booms Busts And Uncertainty
Authors: Jocelyn Pixley
2nd Edition
1107633370, 978-1107633377
