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

question 59

Multiple Choice

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

• A) 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.
• B) The effect of a change in the market risk premium depends on the slope of the yield curve.
• C) If the market risk premium increases by 1%, then the required return on all stocks will rise by 1%.
• D) 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.

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Definitions:

Discriminative Stimulus

A stimulus in the environment that increases the likelihood of a particular response being emitted due to its association with a reinforcement.

Operant Response

Is a behavior or action that is a consequence of the operant conditioning process, wherein behaviors are modified through reinforcement or punishment.

Reinforced

In psychology, refers to the process of strengthening a behavior by providing a reward or removing an adverse stimulus after the behavior occurs.

Positive Reinforcer

A stimulus that, when presented after a behavior, increases the likelihood of that behavior being repeated.