According to the Capital Asset Pricing Model

question 233

Multiple Choice

According to the capital asset pricing model:

• A) There is an inverse relationship between risk and return.
• B) A stock which earns a higher rate of return than the market should have a beta which is greater than 1.0.
• C) An increase in the risk-free rate without a corresponding increase in the market rate of return indicates that the risk premium for a stock with a beta of.8 will increase.
• D) A stock with a beta of 1 will see its expected rate of return increase by 20% if its beta rises to 1.2, all else constant.
• E) A stock with a beta of 2.0 will see its return decline by 2% should the risk-free rate decline from 3% to 2%, all else constant.

---

Definitions:

Adhocracy

An organizational structure that is flexible and adaptable, often characterized by a lack of formal hierarchy and the ability to respond quickly to changes.

Tasks

Specific duties or assignments that are part of a job or activity, often involving a sequence of steps to be completed.

Operations Technology

The collection of hardware, software, and processes used to produce goods or deliver services efficiently and effectively.

Thompson's Classification

A framework for analyzing organizations based on three types of interdependencies: pooled, sequential, and reciprocal.