Question: 3 ) Assume that stock A ' s beta is 1 . 5 and stock B ' s beta is 0 . 5 . Discuss
Assume that stock As beta is and stock Bs beta is Discuss the following statements if they are true or false assuming the CAPM is correct.
A Stock A would be a more desirable addition to a portfolio then Stock B
B In equilibrium, the expected return on Stock B will be greater than that on Stock A
C Stock B would be a more desirable addition to a portfolio than A
D In equilibrium, the expected return on Stock A will be greater than that on B
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