Which of the Following Statements Is CORRECT

question 86

Multiple Choice

Which of the following statements is CORRECT?

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

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Definitions:

Triangular Distribution

A probability distribution shaped like a triangle, which is used to model variables that have known minimum and maximum values and where the mode can be estimated.

NPV Forecast Chart

An NPV Forecast Chart predicts the Net Present Value over time, helping in assessing the profitability of investments.

Cumulative Profit

The total amount of profit earned over a specific period, taking into consideration all revenues and costs.

NPV Forecast Chart

A visual representation forecasting the Net Present Value of a project or investment over time, depicting the expected profitability.