You currently hold a diversified stock portfolio that is exactly as risky as the market. You are considering adding another stock, with a Beta of 1.40, to your portfolio. Assuming you do add the stock to your portfolio, which of the following statements is/are likely to be true? (Choose all that apply.) Group of answer choices The stock's reward-to-risk ratio is less than that of the market. The expected return on your portfolio will decrease. The beta of your portfolio will increase. The new stock is overpriced. The beta of your portfolio will be between 1 and 1.40
You currently hold a diversified stock portfolio that is exactly as risky as the market. You are considering adding another stock, with a Beta of 1.40, to your portfolio. Assuming you do add the stock to your portfolio, which of the following statements is/are likely to be true? (Choose all that apply.) Group of answer choices The stock's reward-to-risk ratio is less than that of the market. The expected return on your portfolio will decrease. The beta of your portfolio will increase. The new stock is overpriced. The beta of your portfolio will be between 1 and 1.40
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
You currently hold a diversified stock portfolio that is exactly as risky as the market. You are considering adding another stock, with a Beta of 1.40, to your portfolio. Assuming you do add the stock to your portfolio, which of the following statements is/are likely to be true? (Choose all that apply.)
Group of answer choices
The stock's reward-to-risk ratio is less than that of the market.
The expected return on your portfolio will decrease.
The beta of your portfolio will increase.
The new stock is overpriced.
The beta of your portfolio will be between 1 and 1.40
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