2023 1 You hold a diversified portfolio consisting of a 5 000 investment in each | Assignments Online

      10.29%
      10.83%
      11.40%
      12.00%

      The riskiness of the portfolio is less than the riskiness of each of the stocks if they were held in isolation.
      The riskiness of the portfolio is greater than the riskiness of one or two of the stocks.
      The beta of the portfolio is less than the betas of each of the individual stocks.
      The beta of the portfolio is greater than the beta of one or two of the individual stocks’ betas.

      True 
      False

      When held in isolation, Stock A has greater risk than Stock B.
      Stock B must be a more desirable addition to a portfolio than Stock A.
      Stock A must be a more desirable addition to a portfolio than Stock B.
      The expected return on Stock A should be greater than that on Stock B.

      “Characteristic line” is another name for the Security Market Line.
      The characteristic line is the regression line that results from plotting the returns on a particular stock versus the returns on a stock from a different industry.
      The slope of the characteristic line is the stock’s standard deviation.
      The distance of the plot points from the characteristic line is a measure of the stock’s diversifiable risk.

      Sometimes a security or project does not have a past history which can be used as a basis for calculating beta.
      Sometimes, during a period when the company is undergoing a change such as toward more leverage, or riskier assets, the calculated beta will be drastically different than the “true” or “expected future” beta.
      The beta of “the market,” can change over time, sometimes drastically.
      Sometimes the past data used to calculate beta do not reflect the likely risk of the firm for the future because conditions have changed.

      True 
      False

      True 
      False