Stock A\'s beta is 1.5 and Stock B\'s beta is 0.5. Which of the following statem
ID: 2726938 • Letter: S
Question
Stock A's beta is 1.5 and Stock B's beta is 0.5. Which of the following statements must be true about these securities? (Assume market equilibrium.)
Stock B must be a more desirable addition to a portfolio than Stock A.
Stock A must be a more desirable addition to a portfolio than Stock B.
The expected return on Stock A should be greater than that on Stock B.
The expected return on Stock B should be greater than that on Stock A.
When held in isolation, Stock A has greater risk than Stock B.
a)Stock B must be a more desirable addition to a portfolio than Stock A.
b)Stock A must be a more desirable addition to a portfolio than Stock B.
c)The expected return on Stock A should be greater than that on Stock B.
D)The expected return on Stock B should be greater than that on Stock A.
e)When held in isolation, Stock A has greater risk than Stock B.
Explanation / Answer
answer is C
The expected return on Stock A should be greater than that on Stock B.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.