Assume That the Risk-Free Rate Is 5

question 106

Multiple Choice

Assume that the risk-free rate is 5%. Which of the following statements is correct?

• A) If a stock has a negative beta, its required return under the CAPM would be less than 5%.
• B) If a stock's beta doubled, its required return under the CAPM would also double.
• C) If a stock's beta were less than 1.0, its required return under the CAPM would less than 5%.
• D) If a stock's beta were 1.0, its required return under the CAPM would be 5%.

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