always decrease. The beta of ABC and XYZ is 1.95 and 0.88, respectively. This information implies that ABC has less market risk than XYZ. A stock has a beta of 1.5. It implies that this stock has lower total risk than the overall market. d) The beta of ABC and XYZ is 1.95 and 0.88, respectively. This information implies that ABC has higher total risk than XYZ. The risk premium investors demand from a stock will increase as the beta of e) the stock increases.
always decrease. The beta of ABC and XYZ is 1.95 and 0.88, respectively. This information implies that ABC has less market risk than XYZ. A stock has a beta of 1.5. It implies that this stock has lower total risk than the overall market. d) The beta of ABC and XYZ is 1.95 and 0.88, respectively. This information implies that ABC has higher total risk than XYZ. The risk premium investors demand from a stock will increase as the beta of e) the stock increases.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Which one of the following statements is correct?
When more stocks are added into a portfolio, the beta of that portfolio will
a)
always decrease.
The beta of ABC and XYZ is 1.95 and 0.88, respectively. This information
b)
implies that ABC has less market risk than XYZ.
A stock has a beta of 1.5. It implies that this stock has lower total risk than
c)
the overall market.
The beta of ABC and XYZ is 1.95 and 0.88, respectively. This information
implies that ABC has higher total risk than XYZ.
The risk premium investors demand from a stock will increase as the beta of
the stock increases.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F176113ce-f246-4977-a9bf-cf122c626bfc%2Ff764df36-a043-4981-8277-79e35a055561%2Fayxb5mn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Which one of the following statements is correct?
When more stocks are added into a portfolio, the beta of that portfolio will
a)
always decrease.
The beta of ABC and XYZ is 1.95 and 0.88, respectively. This information
b)
implies that ABC has less market risk than XYZ.
A stock has a beta of 1.5. It implies that this stock has lower total risk than
c)
the overall market.
The beta of ABC and XYZ is 1.95 and 0.88, respectively. This information
implies that ABC has higher total risk than XYZ.
The risk premium investors demand from a stock will increase as the beta of
the stock increases.
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