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Author Question: Stock A has a beta of 1.6, Stock B has a beta of 1.0, and Stock C has a beta of 0.5. Portfolio P has ... (Read 39 times)

llesku

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on: Aug 7, 2023
Stock A has a beta of 1.6, Stock B has a beta of 1.0, and Stock C has a beta of 0.5. Portfolio P has equal amounts invested in each of the three stocks. Each of the stocks has a standard deviation of 32%. The returns on the three stocks are independent of one another (i.e., the correlation coefficients all equal zero). Assume that there is an increase in the market risk premium, but the risk-free rate remains unchanged. Which of the following statements is correct?

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The required return of all stocks will remain unchanged since there was no change in their betas.


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The required return on the average stock will remain unchanged, but the returns of riskier stocks (such as Stock A) will increase while the returns of safer stocks (such as Stock C) will decrease.


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The required return on Stock A will increase by more than the increase in the market risk premium, while the required return on Stock C will increase by less than the increase in the market risk premium.


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The required return on the average stock will remain unchanged, but the returns of riskier stocks (such as Stock A) will decrease while the returns on safer stocks (such as Stock C) will increase.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by llesku on Aug 7, 2023

ealonif

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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llesku

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Reply 2 on: Aug 7, 2023
Thanks for the timely response, appreciate it

xiaomengxian

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

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