Multiple Choice
Stock A's beta is 1.7 and Stock B's beta is 0.7.Which of the following statements must be true about these securities? (Assume market equilibrium.)
A) Stock B must be a more desirable addition to a portfolio than A.
B) Stock A must be a more desirable addition to a portfolio than B.
C) The expected return on Stock A should be greater than that on B.
D) The expected return on Stock B should be greater than that on A.
E) When held in isolation, Stock A has more risk than Stock B.
Correct Answer:
Verified
Correct Answer:
Verified
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