There are few, if any, real companies with negative betas. But suppose you found one,with .25.,a. How would you expect this stock’s rate of return to change if the overall market rose,by an extra 5 percent? What if the market fell by an extra 5 percent?,b. You have $1 million invested in a well-diversified portfolio of stocks. Now you receive,an additional $20,000 bequest. Which of the following actions will yield the,safest overall portfolio return?,i. Invest $20,000 in Treasury bills (which have 0).,ii. Invest $20,000 in stocks with 1.,iii. Invest $20,000 in the stock with .25.,Explain your answer.
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