Which of the following statements is CORRECT?
A. A portfolio with a large number of randomly selected stocks would have more market risk than a single stock that has a beta of 0.5, assuming that the stock's beta was correctly calculated and is stable.
B. If a stock has a negative beta, its expected return must be negative.
C. A portfolio with a large number of randomly selected stocks would have less market risk than a single stock that has a beta of 0.5.
D. According to the CAPM, stocks with higher standard deviations of returns must also have higher expected returns.
E. If the returns on two stocks are perfectly positively correlated (i.e., the correlation coefficient is +1.0) and these stocks have identical standard deviations, an equally weighted portfolio of the two stocks will have a standard deviation that is less than that of the individual stocks.
Answer: A
You might also like to view...
Pastello, a bakery in New Jersey, needs to sell all the goods in its inventory before they perish. The bakery owners, Mark and Julia, plan to use the cash received from selling the goods to open a new outlet of Pastello in a different locality. In this scenario, the goods stored in Pastello's inventory represent its _____.
A. long-term liabilities B. current liabilities C. current assets D. defensive assets
Compare middleware and enterprise application integration middleware.
What will be an ideal response?
Generally speaking, script kiddies have high levels of technical skills
Indicate whether the statement is true or false.
A journal entry with a debit to cash of $980, a debit to Sales Discounts of $20, and a credit to Accounts Receivable of $1,000 means that a customer has taken a 10% cash discount for early payment.
Answer the following statement true (T) or false (F)