Stock X has a beta of 0.5 and Stock Y has a beta of 1.5. Which of the following statements must be true about these securities? (Assume market equilibrium.) Group of answer choices If the market risk premium declines, Stock Y will have a larger decline in its required return than Stock X. Stock Y has a higher standard deviation than Stock X. If you invest $50,000 in each of Stocks X and Y, your 2-stock portfolio will have a beta lower than 1.0. Stock Y's realized return next year will be higher than Stock X's return. If the expected rate of inflation increases but the market risk premium is unchanged, the required return on Stock Y will increase by more than that on Stock X.
Stock X has a beta of 0.5 and Stock Y has a beta of 1.5. Which of the following statements must be true about these securities? (Assume market equilibrium.) Group of answer choices If the market risk premium declines, Stock Y will have a larger decline in its required return than Stock X. Stock Y has a higher standard deviation than Stock X. If you invest $50,000 in each of Stocks X and Y, your 2-stock portfolio will have a beta lower than 1.0. Stock Y's realized return next year will be higher than Stock X's return. If the expected rate of inflation increases but the market risk premium is unchanged, the required return on Stock Y will increase by more than that on Stock X.
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 25P
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Stock X has a beta of 0.5 and Stock Y has a beta of 1.5. Which of the following statements must be true about these securities? (Assume market equilibrium .)
Group of answer choices
If the market risk premium declines, Stock Y will have a larger decline in its required return than Stock X.
Stock Y has a higher standard deviation than Stock X.
If you invest $50,000 in each of Stocks X and Y, your 2-stock portfolio will have a beta lower than 1.0.
Stock Y's realized return next year will be higher than Stock X's return.
If the expected rate of inflation increases but the market risk premium is unchanged, the required return on Stock Y will increase by more than that on Stock X.
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