Which of the Following Statements Is Most Correct

question 83

Multiple Choice

Which of the following statements is most correct?

• A) The slope of the security market line is beta.
• B) A stock with a negative beta must have a negative required rate of return.
• C) If a stock's beta doubles its required rate of return must double.
• D) If a stock has a beta equal to 1.0, its required rate of return will be unaffected by changes in the market risk premium.
• E) None of the above statements is correct.

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Definitions:

Pension Plans

Financial programs established by employers to provide retirement income for employees.

Amend Benefits

The act of making changes to the terms or conditions of employee benefits plans.

Amortization

The method of systematically amortizing the initial value of a non-physical asset over its estimated useful lifespan.

Pension Expense

The cost recognized by an employer for maintaining a defined benefit retirement plan for its employees.