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You have collected the following data. Based on portfolio theory (CAPM), which scenario seems to be out of place? Stock Required return Standard deviation Market
You have collected the following data. Based on portfolio theory (CAPM), which scenario seems to be out of place? Stock Required return Standard deviation Market Beta X 0.25 0.05 0.17 0 0.16 0.41 0.25 H 0.12 0.20 0.20 Z 0.08 0.15 0.12 Q 0.05 0.00 0.00 Select one: a. Q b. Z c. O d. X e. H Stock X has a beta of 0.5 and Stock Y has a beta of 1.5. Which of the following statements is most correct? Select one: a. If investors' aversion to risk decreases (assume the risk-free rate unchanged), Stock X will have a smaller decline in its required return than will Stock Y. b. If expected inflation increases (but the market risk premium is unchanged), the required returns on the two stocks will decrease by the same amount. c. If the beta of a company doubles, then the required rate of return will also double. d. Stock Y's return has a higher standard deviation than Stock X. e. If you invest $50,000 in Stock X and $50,000 in Stock Y, your portfolio will have a beta less than 1.0, provided the stock returns on the two stocks are not perfectly correlated
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