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 Stock Y has a higher standard deviation than Stock X. 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 returns on the two stocks will increase by the same amount. If you invest $50,000 in each of Stocks X and Y, your 2-stock portfolio will have a beta lower than 1.0. If the market risk premium declines, Stock X will have a larger decline in its required return than Stock Y.
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 Stock Y has a higher standard deviation than Stock X. 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 returns on the two stocks will increase by the same amount. If you invest $50,000 in each of Stocks X and Y, your 2-stock portfolio will have a beta lower than 1.0. If the market risk premium declines, Stock X will have a larger decline in its required return than Stock Y.
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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Question
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
Stock Y has a higher standard deviation than Stock X.
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 returns on the two stocks will increase by the same amount.
If you invest $50,000 in each of Stocks X and Y, your 2-stock portfolio will have a beta lower than 1.0.
If the market risk premium declines, Stock X will have a larger decline in its required return than Stock Y.
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