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 about these securities? (Assume market equilibrium.)
A) stock b must be a more desirable addition to a portfolio than stock a.
B) stock a must be a more desirable addition to a portfolio than stock b.
C) the expected return on stock a should be greater than that on stock b.
D) the expected return on stock b should be greater than that on stock a.
E) when held in isolation, stock a has greater risk than stock b.
Correct Answer:
Verified
Correct Answer:
Verified
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