Multiple Choice
Stock A has a beta = 0.8, while Stock B has a beta = 1.6. Which of the following statements is CORRECT?
A) Stock B's required return is double that of Stock A's.
B) If the marginal investor becomes more risk averse, the required return on Stock B will increase by more than the required return on Stock A.
C) An equally weighted portfolio of Stocks A and B will have a beta lower than 1.2.
D) If the marginal investor becomes more risk averse, the required return on Stock A will increase by more than the required return on Stock B.
Correct Answer:
Verified
Correct Answer:
Verified
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