1. Which of the following is INCORRECT? a All of a stock's risk could be unsystematic. b. A negative beta stock has an expected return less than the risk-free rate. c. Anticipated returns on any given stock are always greater than 0. d. Two assets with a correlation of -1 could be combined to create a portfolio with a standard deviation of zero (no risk).
1. Which of the following is INCORRECT? a All of a stock's risk could be unsystematic. b. A negative beta stock has an expected return less than the risk-free rate. c. Anticipated returns on any given stock are always greater than 0. d. Two assets with a correlation of -1 could be combined to create a portfolio with a standard deviation of zero (no risk).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![1. Which of the following is INCORRECT?
a All of a stock's risk could be unsystematic.
b. A negative beta stock has an expected return less than the risk-free rate.
c. Anticipated returns on any given stock are always greater than 0.
d. Two assets with a correlation of -1 could be combined to create a portfolio with a
standard deviation of zero (no risk).
2. Which of the following measures the total risk of a portfolio?
a. Beta
b. Standard Deviation
c. Correlation Coefficient
d. Alpha
3. Which of the following stocks have the highest systematic risk?
a A stock with high correlation to the market and high returm volatility.
b. A stock with low correlation to the market and a high return volatility.
c A stock with high correlation to the market and a low return volatility.
d. A stock with low correlation to the market and a low return volatility.
4. Which of the following companics have the lowest systematic risk?
a A company that sells soups (Campbells), beta=0.60
b. A coffee company (Starbucks), beta=1.20
cA mid-range clothing store company (Abercrombie & Fitch), beta=1.25
d. A motorcycle manufacturer (Harley-Davidson), beta=2.00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb4f300de-61c2-41b4-a064-bc006d7b726b%2Fcc6ad1a1-eec1-4f58-84ba-f57673e14dfc%2F47omrde_processed.jpeg&w=3840&q=75)
Transcribed Image Text:1. Which of the following is INCORRECT?
a All of a stock's risk could be unsystematic.
b. A negative beta stock has an expected return less than the risk-free rate.
c. Anticipated returns on any given stock are always greater than 0.
d. Two assets with a correlation of -1 could be combined to create a portfolio with a
standard deviation of zero (no risk).
2. Which of the following measures the total risk of a portfolio?
a. Beta
b. Standard Deviation
c. Correlation Coefficient
d. Alpha
3. Which of the following stocks have the highest systematic risk?
a A stock with high correlation to the market and high returm volatility.
b. A stock with low correlation to the market and a high return volatility.
c A stock with high correlation to the market and a low return volatility.
d. A stock with low correlation to the market and a low return volatility.
4. Which of the following companics have the lowest systematic risk?
a A company that sells soups (Campbells), beta=0.60
b. A coffee company (Starbucks), beta=1.20
cA mid-range clothing store company (Abercrombie & Fitch), beta=1.25
d. A motorcycle manufacturer (Harley-Davidson), beta=2.00
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