Answer two and only two of parts A, B, and C. For the two parts you choose to answer, explain why the italicized statement is true or false (to receive full credit, you must explain why in two or three sentences or with an example).
A.) The stock price of Company X doubled over the past year, the stock price of Company Z decreased by over 50%. The market increased by 10%. If the stock market is efficient, the two stocks must have different Betas.
B.) Stock A has a standard deviation of 12%; Stock B has a standard deviation of 10%. According to the CAPM, the required return on Stock A must be higher than the required return on Stock B.
C.) Assuming that the stock market is efficient, an investor cannot double his or her money over the next two years.