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Computation of beta of a portfolio of a stock

Stock A has a beta = 0.8, while Stock B has a beta = 1.6. Which of the following statements is most correct?

a. Stock B's required return is double that of Stock A's.

b. An equally weighted portfolio of Stock A and Stock B will have a beta less than 1.2.

c. If market participants become more risk averse, the required return on Stock B will increase more than the required return for Stock A.

d. All of the answers above are correct.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M9166948

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