Which of the Following Statements Is CORRECT

question 128

Multiple Choice

Which of the following statements is CORRECT?

• A) If a stock has a beta of to 1.0,its required rate of return will be unaffected by changes in the market risk premium.
• B) The slope of the Security Market Line is beta.
• C) Any stock with a negative beta must in theory have a negative required rate of return,provided rRF is positive.
• D) If a stock's beta doubles,its required rate of return must also double.
• E) If a stock's returns are negatively correlated with returns on most other stocks,the stock's beta will be negative.

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Definitions:

Alike

Similar in nature, appearance, or characteristics; having resemblance or common features.

Inductive Generalization

An inferential method where extensive conclusions are drawn from particular instances.

Concentrate

To focus one's mental or physical effort on a particular activity, topic, or issue.

Quiet Places

Locations characterized by low levels of noise, often sought for relaxation or concentration.