A stock with a beta 1 would be considered to be more risky


rue or false?

-A stock with a Beta > 1 would be considered to be more risky than the overall stock market.

-Beta is a measure of the unsystematic risk of a stock.

-The basic premise of portfolio theory is that by adding stocks that have highly correlated returns to a portfolio reduces the overall risk of the portfolio.

-The effect of an efficient portfolio is that systematic risk is largely eliminated.

-If one wants to build an efficient portfolio consisting of two stocks, it would be best if returns of those two stocks have a correlation coefficient < 0.

-Adding more stocks to a portfolio reduces the unsystematic risk of the portfolio.

-The Security Market Line relates the expected return of a stock to its Beta.

-In market equilibrium, the ratio of expected return to Beta for all stocks will be equal.

-In portfolio theory, the risk-free rate has no impact on the 'reward-to-risk' ratio.

-The Beta of a portfolio is the simple average of the Betas of the stocks in that portfolio.

-The stock of a biotechnology company will most likely have a higher Beta than the stock of a public utility company.

-In the Capital Asset Pricing Model, the expected return on a stock depends only on that assets unsystematic risk.

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Financial Management: A stock with a beta 1 would be considered to be more risky
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