Which of the Following Statements Is CORRECT

question 131

Multiple Choice

Which of the following statements is CORRECT?

• A) Beta is measured by the slope of the security market line.
• B) If the risk-free rate rises, then the market risk premium must also rise.
• C) If a company's beta is halved, then its required return will also be halved.
• D) If a company's beta doubles, then its required return will also double.
• E) The slope of the security market line is equal to the market risk premium, (rM − rRF).

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Definitions:

Physiological Needs

Those relating to the basic biological necessities of life.

Maslow's Hierarchy

A psychological theory proposing that human needs are arranged in a hierarchical order, from basic physical needs to self-actualization.

Situational Factors

Factors affecting the consumer decision process; those that are specific to the situation that may override, or at least influence, psychological and social issues.

Lifestyle

The interests, opinions, behaviors, and behavioral orientations of an individual, group, or culture.