Multiple Choice
Stock A has a beta of 0.8 and Stock B has a beta of 1.2.Fifty percent of Portfolio P is invested in Stock A and 50% is invested in Stock B.If the market risk premium (rM - rRF) were to increase but the risk-free rate (rRF) remained constant,which of the following would occur?
A) The required return will increase for both stocks but the increase will be greater for Stock B than for Stock A.
B) The required return will decrease by the same amount for both Stock A and Stock B.
C) The required return will increase for Stock A but will decrease for Stock B.
D) The required return on Portfolio P will remain unchanged.
Correct Answer:
Verified
Correct Answer:
Verified
Q34: An investment has an average return of
Q35: Which of the following best describes behavioural
Q36: Stock A has a beta = 0.8,while
Q37: If an investor buys enough stocks,he or
Q38: ABC Co.has a beta of 1.30 and
Q40: Stock A has an expected return of
Q41: Which best describes risk-averse investors?<br>A)They require higher
Q42: Since the market return represents the expected
Q43: Stock HB has a beta of 1.5
Q44: You are given the following returns