Share X Has $\beta$ ) = 40, Which Means That It Is Considered Four Times Riskier

question 47

Multiple Choice

Share X has ( $\beta$ ) . = 4.0, which means that it is considered four times riskier than the average share, or the share market as a whole.According to the capital asset pricing model, Share X should earn

• A) a total return that is four times greater than the market return, that is, rX = 4 * rM.
• B) a risk premium that is four times greater than the market risk premium-that is, RPX = 4 * RPM, which means that rX B kRF = 4 * (rM B kRF).
• C) a return that is less than the market return (rM) because, all else equal, the high risk associated with Share X will cause its value to decrease.
• D) the risk-free rate of return (rRF).
• E) None of the above is correct.

---

Definitions:

Visualizing Flickering Lights

The process or technique of imagining or observing flashing lights as part of a specific visual or neurological examination.

Triptan

A class of drugs primarily used to treat migraine headaches by stimulating serotonin receptors.

Prophylactic Treatment

Preventative treatment aimed at preventing disease or complications, rather than treating them after they occur.

Combined Oral Contraceptive

A form of birth control in pill form that contains both estrogen and progestin to prevent pregnancy.