QUESTION 11 Which of the following statements is CORRECT? O The beta of a portfolio of stocks is always smaller than the betas of any of the individual stocks. O 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, Rrf O 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. O The security market line is a graph of the expected return of a stock as a function of systematic risk (beta). O The beta of a portfolio of stocks is always larger than the betas of any of the individual stocks in the portfolio.
QUESTION 11 Which of the following statements is CORRECT? O The beta of a portfolio of stocks is always smaller than the betas of any of the individual stocks. O 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, Rrf O 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. O The security market line is a graph of the expected return of a stock as a function of systematic risk (beta). O The beta of a portfolio of stocks is always larger than the betas of any of the individual stocks in the portfolio.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:QUESTION 11
Which of the following statements is CORRECT?
O The beta of a portfolio of stocks is always smaller than the betas of any of the individual stocks.
O 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, Rf.
O 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.
O The security market line is a graph of the expected return of a stock as a function of systematic risk (beta).
O The beta of a portfolio of stocks is always larger than the betas of any of the individual stocks in the portfolio.
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