If You Assume Beta Is Greater Than 1,then Which of These

question 46

Multiple Choice

If you assume beta is greater than 1,then which of these will increase the cost of equity capital according to CAPM?
I.Increase in the risk-free rate
II.Decrease in the risk-free rate
III.Increase in the market rate of return
IV.Decrease in the market rate of return

• A)III only
• B)I and III only
• C)I and IV only
• D)II and IV only
• E)II and III only