Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Which of the following is true if the market is in equilibrium? Security returns are all equal All stocks are held in direct proportion to
- Which of the following is true if the market is in equilibrium?
- Security returns are all equal
- All stocks are held in direct proportion to their market cap
- The ratio of a stocks contribution the markets risk premium divided by its contribution to market variance is the same for all stocks
- The ratio of a stocks contribution the markets risk premium divided by its contribution to market variance is equal to the market risk premium divided by the market variance.
- The sum of each stocks contribution to market risk premium equals the market risk premium
- The sum of each stocks contribution to market variance equals the market variance.
- The market portfolio lies on the security market line
- The expected alpha of any portfolio on the security market line is zero
- Its NOT possible for a portfolio of stocks to have a higher return than that of the market portfolio.
- Its NOT possible for a portfolio of stocks to have a lower return than that of the market portfolio.
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