Question
Suppose the beta estimated from the CAPM for stock A is 2.3 and stock B is 1.1. Which of the following is true? A. According
Suppose the beta estimated from the CAPM for stock A is 2.3 and stock B is 1.1. Which of the following is true?
A. According to the CAPM, stock A has a higher idiosyncratic risk
B. According to the CAPM, the required rate of return of stock B is higher
C. The beta of the equally weighted portfolio of stock A and B is 1.2
D. None of the above
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Financial Markets and Institutions
Authors: Jeff Madura
11th Edition
1133947875, 9781305143005, 1305143000, 978-1133947875
