# Ch 6 - Question 1 (1 point) Stock A's beta is 1.5 and Stock...

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Question 1 (1 point) Stock A's beta is 1.5 and Stock B's beta is 0.5. Which of the following statements must be true, assuming the CAPM is correct. Student response: Student Respons e Answer Choices a. Stock A would be a more desirable addition to a portfolio than Stock B. b . In equilibrium, the expected return on Stock B will be greater than that on Stock A. c. When held in isolation, Stock A has more risk than Stock B. d . Stock B would be a more desirable addition to a portfolio than Stock A. e. In equilibrium, the expected return on Stock A will be greater than that on Stock B.??? Score:0 / 1 Question 2 (1 point) Jane has a portfolio of 20 average stocks, and Dick has a portfolio of 2 average stocks. Assuming the market is in equilibrium, which of the following statements is CORRECT? Student response: Student Respons e Answer Choices a. Jane's portfolio will have less diversifiable risk and also less market risk than Dick's portfolio. b . The required return on Jane's portfolio will be lower than that on Dick's portfolio because Jane's portfolio will have less total risk. c. Dick's portfolio will have more diversifiable risk, the same market risk, and thus more total risk than Jane's portfolio, but the required

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(and expected) returns will be the same on both portfolios. d . If the two portfolios have the same beta, their required returns will be the same, but Jane's portfolio will have less market risk than Dick's. e. The expected return on Jane's portfolio must be lower than the expected return on Dick's portfolio because Jane is more diversified. Score:1 / 1 Question 3 (1 point) Which of the following statements is CORRECT? Student response: Student Respons e Answer Choices a. The beta of a portfolio of stocks is always smaller than the betas of any of the individual stocks. b . If you found a stock with a zero historical beta and held it as the only stock in your portfolio, you would by definition have a riskless portfolio. c. The beta coefficient of a stock is normally found by regressing
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Ch 6 - Question 1 (1 point) Stock A's beta is 1.5 and Stock...

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