7. (TCO 7) If the market rate of return is 10% and the beta on a particular stoc
ID: 2678355 • Letter: 7
Question
7. (TCO 7) If the market rate of return is 10% and the beta on a particular stock is 1.25, the return on the stock will be: (Points : 3)
greater than 10%.
greater or less than 10%, depending on the risk-free rate of return.
less than 10%.
dependent on some other factor.
8. (TCO 7) For two investments with a correlation coefficient (rij) greater than +1, the portfolio standard deviation will be __________ the weighted average of the individual investments' standard deviation. (Points : 3)
more than
less than
equal to
zero compared to
Explanation / Answer
greater or less than 10%, depending on the risk-free rate of return.