If You Plotted the Returns of a Company Against Those

question 38

True/False

If you plotted the returns of a company against those of the market and found that the slope of your line was negative, the CAPM would indicate that the required rate of return on the stock should be less than the risk-free rate for a well-diversified investor, assuming that the observed relationship is expected to continue in the future.

---

Definitions:

National Debt

The total amount of money that a country's government has borrowed, by various means, to fund its expenditures beyond what it collects in taxes.

Decreasing Rate

A situation where the rate or speed of a process or value is diminishing over time.

Full Employment GDP

An economic condition where all available labor resources are being used in the most efficient way possible, reflecting the highest level of economic output.

Unemployment Level

The fraction of working-age individuals without a job, yet actively trying to find one.