Which of the Following Statements Is CORRECT

question 109

Multiple Choice

Which of the following statements is CORRECT?

• A) If a company's beta doubles,then its required rate of return will also double.
• B) Other things held constant,if investors suddenly become convinced that there will be deflation in the economy,then the required returns on all stocks should increase.
• C) If a company's beta were cut in half,then its required rate of return would also be halved.
• D) If the risk-free rate rises by 0.5% but the market risk premium declines by that same amount,then the required rates of return on stocks with betas less than 1.0 will decline while returns on stocks with betas above 1.0 will increase.
• E) If the risk-free rate rises by 0.5% but the market risk premium declines by that same amount,then the required rate of return on an average stock will remain unchanged,but required returns on stocks with betas less than 1.0 will rise.

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Definitions:

Mesozoic

An era of Earth's history between 252 to 66 million years ago, known as the age of dinosaurs and significant geological and evolutionary changes.

Geologic Timescale

A system of chronological dating that relates geological strata to time, used by geologists to describe the timing and relationships between events in Earth's history.

Quantitative Data

Numerical data that can be measured and written down with numbers, used to quantify attitudes, opinions, behaviors, and other defined variables.

Temperature Data

Numerical information that represents the measurement of heat energy within a specific area or system, often used in climate and environmental studies.