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Stock A has a beta of
0.76,
stock B has a beta of
1.38,
and stock C has a beta of
0.31.
a. Rank these stocks from the most risky to the least risky.
b. If the return on the market portfolio increases by
12.2%,
what change in the return for each of the stocks would you expect?
c. If the return on the market portfolio declines by
5.8%,
what change in the return for each of the stocks would you expect?
d. If you felt the stock market was about to experience a significant decline, which stock would you be most likely to add to your portfolio? Why?
e. If you anticipated a major stock market rally, which stock would you be most likely to add to your portfolio? Why?
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