Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. please answer the benchmark for a well-diversifi

Please answer The benchmark for a well-diversified stock portfolio is the market portfolio,...

70.2K

Verified Solution

Question

Accounting

image

Please answer

The benchmark for a well-diversified stock portfolio is the market portfolio, which is a portfolio containing all stocks. The relevant risk of an individual stock is measured by its beta coefficient, which is defined under the Capital Asset Pricing Model (CAPM) as the amount of risk that the stock contributes to the well-diversified portfolio. Based on your understanding of the CAPM and beta, answer the following question: Which of the following statements about stock's correlation with the market is true? O A stock with low stand-alone risk will tend to destabilize the portfolio O A stock with a low correlation with the market is risky. A stock with a high correlation with the market is risky

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students