If portfolio A has a beta of 1.5 and portfolio Z has a beta of -1.5, what do the two values indicate? If the return on the market rises by 20%, what impact, if any, would this have on the returns from portfolios A and Z? Explain.
Stock A has a beta of 0.8, stock B has a beta of 1.4, and stock C has a beta of -0.3. a. Rank these stocks from the most risky to the least risky. b. If the return on the market portfolio increases by 12%, what change in the return for each of the stocks would you expect? c. If the return on the market portfolio declines by 5%, what change in the return for each of the stocks would you expect? d. If you felt the stock market was about to experience a significant decline, which stock would you be most likely to add to your portfolio? Why? e. If you anticipated a major stock market rally, which stock would you be most likely to add to your portfolio? Why?
