Assume That the Risk-Free Rate Remains Constant,but the Market Risk

question 125

Multiple Choice

Assume that the risk-free rate remains constant,but the market risk premium declines.Which of the following is most likely to occur?

• A) The required return on a stock with beta = 1.0 will not change.
• B) The required return on a stock with beta > 1.0 will increase.
• C) The return on "the market" will remain constant.
• D) The return on "the market" will increase.
• E) The required return on a stock with a positive beta < 1.0 will decline.

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Definitions:

Voltage Spike

A sudden, brief increase in voltage significantly above the normal level, potentially harmful to electrical equipment.

DC Resistive Load

A load that resists current in a direct current (DC) circuit, typically through the dissipation of energy in the form of heat.

Potential Noise

Refers to possible electromagnetic disturbances that may disrupt or degrade the performance of electronic devices or systems.

Non-Inductive Resistive Loads

Electrical loads that do not create a significant magnetic field when current passes through them, such as heaters or incandescent light bulbs, characterized by pure resistance without inductance.