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What is the sign of the risk premium of a negative-beta stock? Explain. (Assume the risk premium of the market portfolio is positive) (Select the best choice below.) A. Indeterminate-not all negative beta stocks have negative risk premiums. B. Positive-all stocks must have positive risk premiums. OC. Negative-assuming the market risk premium is positive, the risk premium has the same sign as beta. OD. Zero-stocks with a negative beta have zero risk premiums.

What is the sign of the risk premium of a negative-beta stock? Explain. (Assume the risk premium of the market portfolio is positive) (Select the best choice below.) A. Indeterminate-not all negative beta stocks have negative risk premiums. B. Positive-all stocks must have positive risk premiums. OC. Negative-assuming the market risk premium is positive, the risk premium has the same sign as beta. OD. Zero-stocks with a negative beta have zero risk premiums.

Essentials Of Investments
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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What is the sign of the risk premium of a negative-beta stock? Explain. (Assume the risk premium of the market portfolio is positive) (Select the best choice below.) A. Indeterminate-not all negative beta stocks have negative risk premiums. OB. Positive all stocks must have positive risk premiums. OC. Negative-assuming the market risk premium is positive, the risk premium has the same sign as beta. OD. Zero-stocks with a negative beta have zero risk premiums. 4 GLEEV SAMSUNG Time Remaining: 02:51:01 20 G Next 6:02 PM
Transcribed Image Text:What is the sign of the risk premium of a negative-beta stock? Explain. (Assume the risk premium of the market portfolio is positive) (Select the best choice below.) A. Indeterminate-not all negative beta stocks have negative risk premiums. OB. Positive all stocks must have positive risk premiums. OC. Negative-assuming the market risk premium is positive, the risk premium has the same sign as beta. OD. Zero-stocks with a negative beta have zero risk premiums. 4 GLEEV SAMSUNG Time Remaining: 02:51:01 20 G Next 6:02 PM
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