Question: 1. Are the following true or false? Explain why (a) Stocks with a beta of-1 st have an expected return of zero (b) The CAPM

1. Are the following true or false? Explain why (a) Stocks with a beta of-1 st have an expected return of zero (b) The CAPM implies that investors require a higher return to hold more volatile stocks (c) You can construct a portfolio with beta of 1.5 by borrowing 50 per cent of your budget and investing the proceeds plus the initial amount in the market portfolio

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