Finance T/F

The Capital Asset Pricing Model predicts that a security with a beta of zero will provide an expected rate of return of zero

FALSE If beta=0 then the assets expected return should equal the risk free rate, not 0

An investor who puts $10k in Treasury Bills and $20k in the market portfolio will have a portfolio beta of 2.0

FALSE The portfolio is invested 1/3 in T-bills and 2/3 in the market

Investors demand higher expected rates of return on stocks with more variable rates of return

FALSE investors want higher rates of return on investments with high risk

Investors demand higher expected rates of return from stocks with returns that are highly exposed to macroeconomic changes

TRUE

Investors demand higher expected rates of return from stocks with returns that are very sensitive to fluctuations in the stock market

TRUE