If an individual stock's beta is higher than 1.0, that stock is: Group of answer choices exactly as risky as the market. always the most attractive to investors. less risky than the market. riskier than the market.
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19
If an individual stock's beta is higher than 1.0, that stock is:
Group of answer choices
exactly as risky as the market.
always the most attractive to investors.
less risky than the market.
riskier than the market.
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Solved in 2 steps
- 17 [Question text] Stock W, X, Y and Z has a beta of 1.19, 0.87, 0.91 and 1.26, respectively. Based on the beta values, which stock should you choose if you are a risk averse investor? Select one: A. Z B. X C. Y D. W19 [Question text] The common stock of DEE Bhd. has a beta of 1.24 and an actual expected return of 13.25 percent. The risk-free rate of return is 3.7 percent and the market rate of return is 11.78 percent. Which one of the following statements is TRUE given this information? Select one: A. The actual expected stock return indicates the stock is currently overpriced. B. The stock is currently underpriced. C. The stock has less systematic risk than the overall market. D. The actual expected stock return will graph above the security market lin16. Stock X's beta is 1.8 and Stock Y's beta is 1.0. Which of the following statement must be true about these securities? Group of answer choices The expected return on Stock X should be greater than that on Stock Y. The expected return on Stock Y should be greater than that on Stock X. Stock X must be a more desirable addition to a portfolio than Stock Y. Stock Y must be a more desirable addition to a portfolio than Stock X.
- 25) Given the following correlation matrix, a risk-averse investor would most likely prefer which of the following 2-stock portfolios (all else equal)? Stock A B C D A +1 B +0.8 +1 C +0.2 -0.55 +1 D -0.15 -0.78 +0.3 +1 Select one or more: A and C. C and B A and B C and D. A and D D and B10) Using the single index model, what is the alpha of a stock with beta of 1.5, a market return of 14%, risk free rate of 3% and the actual return of the stock is 19%? A) −1.37% B) 0.75% C) 1.80% D) 0.5% E) −3.12% Provide an accurate answer with justification.Stock A has a beta of 1.5 and Stock B has a beta of 0.8. Which of the following statements is most accurate? Question 15 options: Stock A has a lower expected return than Stock B. Stock A has more systematic risk than Stock B. Stock A has less diversifiable risk than Stock B. Stock A has more total risk than Stock B.
- 27. You have developed the following data on three stocks:Stock Standard Deviation BetaA 0.15 0.79B 0.25 0.61C 0.20 1.29 If you are a risk minimizer, you should choose Stock ____ if it is to be held in isolation and Stock ____ ifit is to be held as part of a well-diversified portfolio.a. A; Ab. A; Bc. B; Ad. C; Ae. C; BIf an individual stock's beta is higher than 1.0, that stock is: Group of answer choices always the most attractive to investors. exactly as risky as the market. riskier than the market. less risky than the market.15 A stock with a beta of zero would be expected to have a rate of return equal to Group of answer choices the risk-free rate the market rate of return the market risk premium zero
- Questions 21 and 22 use the data in the table below. An investor is considering investing in one of the three stocks shown below: Stock Standard Deviation Beta A 20% 0.49 B 10% 0.61 C 7% 0.92 D 12% 1.29 If the stock is to be held in isolation and an investor is a strict risk minimizer, the investor would choose: Stock A if it is to be held in isolation. Stock B if it is to be held in isolation. Stock C if it is to be held in isolation. Stock D if it is to be held in isolation. Any of the Stocks would minimize risk if it is to be held in isolation. There is not enough information to make the decision. If the stock is to be held as part of a well-diversified portfolio and an investor is a strict risk minimizer, the investor would choose: Stock A if it is to be held in a well-diversified portfolio. Stock B if it is to be held in a well-diversified portfolio. Stock C if it is to be held in a well-diversified portfolio.…i) The covariance between stock A and market return is 135. The standard deviation of market’s return is 15%. What is the beta of stock A?j) What are defensive stocks?k) What is an efficient set of securities?l) Is it true that a market which is efficient in its semi-strong form is automatically efficient in its weak form?25 - Which of the following statements is CORRECT? If you found a stock with a zero historical beta and held it as the only stock in your portfolio, you would by definition have a riskless portfolio. The beta coefficient of a stock is normally found by regressing past returns on a stock against past market returns. One could also construct a scatter diagram of returns on the stock versus those on the market, estimate the slope of the line of best fit, and use it as beta. However, this historical beta may differ from the beta that exists in the future. The beta of a portfolio of stocks is always larger than the betas of any of the individual stocks. It is theoretically possible for a stock to have a beta of 1.0. If a stock did have a beta of 1.0, then, at least in theory, its required rate of return would be equal to the risk-free (default-free) rate of return. The beta of a portfolio of stocks is always smaller than the betas of any of the individual stocks.