Which of the Following Statements Is Most Correct

question 84

Multiple Choice

Which of the following statements is most correct?

• A) The SML relates required returns to firms' systematic (or market)risk.The slope and intercept of this line cannot be controlled by the financial manager.
• B) The slope of the SML is determined by the value of beta.
• C) If you plotted the returns of a given stock against those of the market,and you found that the slope of the regression 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 on into the future.
• D) If investors become less risk averse,the slope of the Security Market Line will increase.
• E) Statements a and c are both true.

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Definitions:

Sustainability

The capacity to maintain or support an activity or process over the long term, often with a focus on environmental, economic, and social considerations.

Ethical Dilemma

A situation in which a decision must be made between two or more morally acceptable or unacceptable alternatives.

Ethical Behaviour

Conduct that is in line with accepted moral norms and values, often characterized by honesty, fairness, and integrity.

Ethical Issues

Moral challenges that arise in professional and personal contexts, requiring individuals or organizations to choose actions that align with ethical standards.