As the Risk-Free Rate Increases, the Required Rate of Return

question 65

True/False

As the risk-free rate increases, the required rate of return for common stock decreases.
"K" is utilized in all cost of capital decisions and bears a direct relationship to increases and decreases in R_f.

---

Definitions:

Independent Variable

A factor in scientific research that is intentionally changed to examine its impact on a dependent outcome.

Selection Bias

A distortion in a statistical analysis resulting from the method of collecting samples, where some members of the intended population are less likely to be included than others.

Natural Groups

Groups that exist in the real world as they are, without manipulation or creation for research purposes, such as ethnic or gender groups.

Two Groups

A research design involving comparison between two separate groups of participants to determine the effect of a variable.