Which of the Following Statements Is CORRECT

question 87

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 r_RF 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:

Dividends Per Share

The total dividends declared by a company for each share of its stock.

Accounts Receivable Turnover

A financial metric that measures how efficiently a company collects revenue from its credit customers, calculated by dividing net credit sales by average accounts receivable.

Days' Sales In Receivables

A financial ratio that measures the average number of days it takes for a company to collect payments from its credit sales.

Price-Earnings Ratio

A financial ratio that measures a company's share price relative to its earnings per share, indicating investor expectations of growth and profitability.