All Else Held Constant, Which of the Following Will Increase

question 84

Multiple Choice

All else held constant, which of the following will increase the expected return on a security based on CAPM? Assume the market return exceeds the risk-free rate and both values are positive. Also assume the beta exceeds 1.0.
I. decrease in the security beta
II. increase in the market risk premium
III. decrease in the risk-free rate
IV. increase in the market rate of return

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

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Definitions:

Obsessions

Persistent, intrusive, and unwanted thoughts that cause distress or anxiety.

Depression

A common mental disorder characterized by persistent sadness and a lack of interest or pleasure in previously rewarding or enjoyable activities.

Panic Attacks

Sudden episodes of intense fear or acute discomfort, accompanied by physical and/or emotional symptoms such as rapid heartbeat, sweating, or feelings of dread.

Generalized Anxiety Disorder

A psychological disorder characterized by excessive, uncontrollable, and often irrational worry about everyday things that is disproportionate to the actual source of worry.