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.
Stock A would be a more desirable addition to a portfolio then Stock B.
In equilibrium, the expected return on Stock B will be greater than that on Stock A.
When held in isolation, Stock A has more risk than Stock B. Stock B would be a more desirable addition to a portfolio than A.
In equilibrium, the expected return on Stock A will be greater than that on B.