Question: Within the CAPM equation, a higher BETA can be interpreted as... Note CAPM: rs = rf + Beta(rm - rf) A. high Beta stock: one
Within the CAPM equation, a higher BETA can be interpreted as...
Note CAPM: rs = rf + Beta(rm - rf)
| A. | high Beta stock: one would expect a return on the stock investment (rs) to exceed that of the S&P 500; however the riskiness of the stock would not exceed that of the market portfolio | |
| B. | a beta that exceeds "1.3" can be viewed as stock that is riskier than an investment in a diversified portfolio such as the S&P 500 | |
| C. | high beta stock: the stock is riskier than the S&P 500, but one would not expect a higher return for such a stock | |
| D. | None of the above |
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