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different stocks True/False . Stock A’s beta is 1.5 and Stock B’s beta is 0.5. Which of the following statements must be true about these securities? (Assume market equilibrium.) e. When held in isolation, Stock A has greater risk than Stock B. a. Stock B must be a more desirable addition to a portfolio than Stock A. b. Stock A must be a more desirable addition to a portfolio than Stock B. c. The expected return on Stock A should be greater than that on StockB. d. The expected return on Stock B should be greater than that on StockA. e. When held in isolation, Stock A has greater risk than Stock B. Medium: . For markets to be in equilibrium (that is, for there to be no strong pressure for prices to depart from their current levels), a. The past realized rate of return must be equal to the expected rate of return; that is, . b. The required rate of return must equal the realized rate of return; that is, . c. all companies must pay dividends. d. no companies can be in danger of declaring bankruptcy. e. The expected rate of return must be equal to the required rate of return; that is, . . Which of the following statements is CORRECT? a. The slope of the CML is ( M – rRF)/bM. b. All portfolios that lie on the CML to the right of M are inefficient. c. All portfolios that lie on the CML to the left of M are inefficient. d. The slope of the CML is ( M – rRF)/M.. e. The Capital Market Line (CML) is a curved line that connects the risk-free rate and the market portfolio. . In a portfolio of three different stocks, which of the following could NOT be true? a. The riskiness of the portfolio is greater than the riskiness of one or two of the stocks. b. The beta of the portfolio is less than the betas of each of the individual stocks. c. The beta of the portfolio is greater than the beta of one or two of the individual stocks’ betas. d. The beta of the portfolio can not be equal to 1. e. The riskiness of the portfolio is less than the riskiness of each of the stocks if they were held in isolation. . You have the following data on (1) the average annual returns of the market for the past 5 years and (2) similar information on Stocks A and B. Which of the possible answers best describes the historical betas for A and B? Years Market Stock A Stock B 1 0.03 0.16 0.05 2 -0.05 0.20 0.05 3 0.01 0.18 0.05 4 -0.10 0.25 0.05 5 0.06 0.14 0.05 a. bA > +1; bB = 0. b. bA = 0; bB = -1. c. bA < 0; bB = 0. d. bA < -1; bB = 1. e. bA > 0; bB = 1. Math Assignment Help, Math Homework help, Math Study Help, Math Course Help