Which of the following statements is correct?
A)A portfolio with a large number of randomly selected stocks would have more market risk than a single stock that has a beta of 0.5, assuming that the stock's beta was correctly calculated and is stable.
B)If a stock has a negative beta, its expected return must be negative.
C)A portfolio with a large number of randomly selected stocks would have less market risk than a single stock that has a beta of 0.5.
D)According to the CAPM, stocks with higher standard deviations of returns must also have higher expected returns.

Question

Quizplus · Accepted Answer

The Answer of Which of the following statements is correct?
A)A portfolio with a large number of randomly selected stocks would have more market risk than a single stock that has a beta of 0.5, assuming that the stock's beta was correctly calculated and is stable.
B)If a stock has a negative beta, its expected return must be negative.
C)A portfolio with a large number of randomly selected stocks would have less market risk than a single stock that has a beta of 0.5.
D)According to the CAPM, stocks with higher standard deviations of returns must also have higher expected returns.

Which of the Following Statements Is Correct