Question: Stock A ' s beta is 2 . 0 and Stock B ' s beta is 0 . 5 . According to the Capital Asset

Stock A's beta is 2.0 and Stock B's beta is 0.5. According to the Capital Asset Pricing Model (CAPM), which of the following statements must be true?
The required rate of return of Stock A will be greater than that of Stock B.
The required rate of return of Stock B will be greater than that of Stock A.
Stock A would be a more desirable addition to a portfolio then Stock B.
Stock A has less undiversifiable risk than Stock B.
Stock A ' s beta is 2 . 0 and Stock B ' s beta is

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