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Utilising the Security Market Line an Investor Owning a Stock

Question 10

Multiple Choice

Utilising the security market line an investor owning a stock with a beta of −2 would expect the stock's return to ____ in a market that was expected to decline 15 per cent.


A) rise or fall an indeterminate amount
B) fall by 3 per cent
C) fall by 30 per cent
D) rise by 13 per cent
E) rise by 30 per cent

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