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jshayneo jshayneo
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A year ago
Stock X has a beta of 0.7, while Stock Y has a beta of 1.3. Which of the following statements is correct?


▸

A portfolio consisting of $80,000 invested in Stock X and $80,000 invested in Stock Y will have a lower required return than that of the overall market.



▸

Stock Y must have a higher expected return and a higher standard deviation than Stock X.



▸

If the market risk premium decreases but expected inflation is unchanged, the required return on both stocks will decrease, but the decrease will be smaller for Stock X.



▸

If expected inflation decreases but the market risk premium is unchanged, the required return on both stocks will increase by the same amount.

Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
Authors:
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vlad8919vlad8919
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A year ago
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jshayneo Author
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Helped a lot
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