Problem $8-12$ CAPM

Indicate whether the following statements are true or false.

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a$.$ Investors demand higher expected rates of return on stocks with more variable rates of return.

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multiple choice $1$

True

False

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b$.$ The CAPM predicts that a security with a beta of $0$ will offer a zero expected return.

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multiple choice $2$

True

False

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c$.$ An investor who puts $$10,000$ in Treasury bills and $$20,000$ in the market portfolio will have a beta of $2\mathrm{.}0.$

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multiple choice $3$

True

False

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d$.$ Investors demand higher expected rates of return from stocks with returns that are highly exposed to macroeconomic risks.

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multiple choice $4$

True

False

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e$.$ Investors demand higher expected rates of return from stocks with returns that are very sensitive to fluctuations in the stock market.

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multiple choice $5$

True

False