More desirable addition to portfolio then stock

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Reference no: EM13941272

Stock A's beta is 1.5 and Stock B's beta is 0.5. Which of the following statements must be true, assuming the CAPM is correct.

a. Stock A would be a more desirable addition to a portfolio then Stock B.

b. In equilibrium, the expected return on Stock B will be greater than that on Stock A.

c. When held in isolation, Stock A has more risk than Stock B.

d. Stock B would be a more desirable addition to a portfolio than A.

e. In equilibrium, the expected return on Stock A will be greater than that on B.

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Reference no: EM13941272

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