Multiple Choice
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?
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) Stock B would be a more desirable addition to a portfolio than Stock A.
D) In equilibrium, the expected return on Stock A will be greater than that on Stock B.
Correct Answer:
Verified
Correct Answer:
Verified
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