# Question: Are the following statements true or false a Stocks with

Are the following statements true or false?

a. Stocks with a beta of zero offer an expected rate of return of zero.

b. The CAPM implies that investors require a higher return to hold highly volatile securities.

c. You can construct a portfolio with a beta of .75 by investing .75 of the budget in bills and the remainder in the market portfolio.

a. Stocks with a beta of zero offer an expected rate of return of zero.

b. The CAPM implies that investors require a higher return to hold highly volatile securities.

c. You can construct a portfolio with a beta of .75 by investing .75 of the budget in bills and the remainder in the market portfolio.

**View Solution:**## Answer to relevant Questions

The following is scenario for three stocks constructed by the security analysts of Pf Inc. Construct an arbitrage portfolio using these stocks. Are the intercepts of the two regressions consistent with the CAPM? Interpret their values. Suppose that the index model for stocks A and B is estimated with the following results: RA = .03 + .70RM + eA RB = 2.02 + 1.20RM + ...Use the data in Table 10.4 to compute a five- day moving average for Computers, Inc. Can you identify any buy or sell signals? Suppose that a one- year zero- coupon bond with a face value of $ 100 currently sells at $ 94.34, while a two- year zero sells at $ 84.99. You are considering the purchase of a two- year- maturity bond making annual coupon ...An unanticipated expansionary monetary policy has been implemented. Indicate the impact of this policy on each of the following four variables: a. Inflation rate b. Real output and employment c. Real interest rate d. ...Post your question