Question
Stock X has a beta of 0.6, while Stock Y has a beta of 1.4. Which of the following statements must be true about these
Stock X has a beta of 0.6, while Stock Y has a beta of 1.4. Which of the following statements must be true about these securities? (Assume market equilibrium.) Group of answer choices An equally-weighted portfolio of Stocks X and Y will have a required return that exceeds that of the market. If expected inflation increases but the market risk premium is unchanged, the required return on both stocks will fall by the same amount. Stock Y's realized return next year will be great than that on Stock X. If the market risk premium declines, Stock Y's required return will decrease by more than that on Stock X. Stock Y has a higher expected return and a higher standard deviation than Stock X.
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