Stock X has a beta of 0.8 and Stock Y has a beta of 1.2. 50% of Portfolio P is invested in Stock X and 50% is invested in Stock Y. a. The required return will decrease by the same amount for both Stock X and Stock Y. b. The required return will increase for both stocks but the increase will be greater for Stock Y than for Stock X. d. The required return will increase for Stock Y but will decrease for Stock X. e. The required return on Portfolio P will remain unchanged.
Stock X has a beta of 0.8 and Stock Y has a beta of 1.2. 50% of Portfolio P is invested in Stock X and 50% is invested in Stock Y. a. The required return will decrease by the same amount for both Stock X and Stock Y. b. The required return will increase for both stocks but the increase will be greater for Stock Y than for Stock X. d. The required return will increase for Stock Y but will decrease for Stock X. e. The required return on Portfolio P will remain unchanged.
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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Stock X has a beta of 0.8 and Stock Y has a beta of 1.2. 50% of Portfolio P is invested in Stock X and 50% is invested in Stock Y.
a. The required return will decrease by the same amount for both Stock X and Stock Y.
b. The required return will increase for both stocks but the increase will be greater for Stock Y than for Stock X.
d. The required return will increase for Stock Y but will decrease for Stock X.
e. The required return on Portfolio P will remain unchanged.
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