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Author Question: Most stock analysts would agree that more variance is an indicator of less risk. Indicate whether ... (Read 117 times)

mynx

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on: Jul 10, 2018
Most stock analysts would agree that more variance is an indicator of less risk.
 
  Indicate whether the statement is true or false.

Question 2

You have been asked to analyze two stocks, Stock A and Stock B. The beta of stock A is 1.2, and the beta of stock B is 0.8. The expected return on stock A is 13.5, the expected return on stock B is 11.0 and the risk-free rate is 7.
 
  We also know that stock A is fairly priced. Which of the following regarding Stock B must be true?
  A) The expected return on stock A is too high.
  B) Stock B is also fairly priced.
  C) The price of stock B is too high.
  D) The expected return on stock B is too high.


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isabelt_18

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Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: FALSE
Explanation: Most stock analysts would agree that more variance is an indicator of MORE risk.

Answer to Question 2

C


mynx

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Reply 2 on: Jul 10, 2018
:D TYSM

emsimon14

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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