Which of the Following Statements Is CORRECT? (Assume That the Risk-Free

question 30

Multiple Choice

Which of the following statements is CORRECT? (Assume that the risk-free rate is a constant.)

• A) The effect of a change in the market risk premium depends on the slope of the yield curve.
• B) If the market risk premium increases by 1%, then the required return on all stocks will rise by 1%.
• C) If the market risk premium increases by 1%, then the required return will increase by 1% for a stock that has a beta of 1.0.
• D) The effect of a change in the market risk premium depends on the level of the risk-free rate.
• E) If the market risk premium increases by 1%, then the required return will increase for stocks that have a beta greater than 1.0, but it will decrease for stocks that have a beta less than 1.0.

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Definitions:

Parasitic Infections

Conditions caused by parasites that invade the body, leading to various symtoms and health issues.

WBCs

White Blood Cells, part of the immune system helping to fight infections and other diseases.

Eosinophils

A type of white blood cell involved in the body’s immune response, especially known for its role in fighting parasitic infections and involvement in allergic reactions.

Hematocrit

The ratio of the volume of red blood cells to the total volume of blood, expressed as a percentage, used to diagnose and treat various conditions.