If the Market Risk Premium Is (Rm - Rf) Is

question 18

Multiple Choice

If the market risk premium is (rm - rf) is 8%, then according to the CAPM, the risk premium of a stock with beta value of 1.7 must be:

• A) less than 12%
• B) 12%
• C) greater than 12%
• D) cannot be determined

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Definitions:

Contract Law

The branch of law dealing with the formation, interpretation, and enforcement of agreements between parties.

Untrue Statements

Assertions or claims that are false, misleading, or not aligned with the truth.

Liquidated Debt

A debt whose exact monetary value has been determined and agreed upon by all parties involved.

Exception Rule

A principle or regulation that specifies conditions under which an ordinary rule may not apply or may be altered.