Please answer true or false to each of the following

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Please answer true or false to each of the following statements and briefly justify your answer.

(a) The CAPM predicts that a security with a beta of zero will offer an expected rate of return of 0%.

(b) An investor who puts $10,000 in T-Bills and $20,000 in the market portfolio will have a beta of 2.

(c) Investors demand higher expected rates of returns for stocks that are more exposed to macroeconomic shocks.

(d) Investors demand higher expected rates of returns for stocks that are more sensitive to fluctuations in the stock market.

(e) Beta is a measure of risk and the risk free asset has a beta of zero. Therefore the lowest possible value that a beta can have is zero.

Reference no: EM13480490

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