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problem: Stock 1st has a beta = 0.8, while Stock B has a beta = 1.6. Which of the following statements is most correct?

[A] If market participants become more risk averse, the required return on Stock 2nd will increase more than the required return for Stock 1st.

[B] Stock 2nd required return is double that of Stock 1st.

[C] An equally weighted portfolio of Stock 1st and Stock 2nd will have a beta less than 1.2.

[D] All of the answers above are correct.

Portfolio Management, Finance

  • Category:- Portfolio Management
  • Reference No.:- M919607

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