Which of the Following Statements Is Correct

question 61

Multiple Choice

Which of the following statements is correct?

• A)If a company's beta doubles, then its required rate of return will also double.
• B)Other things held constant, if investors suddenly became convinced that there would be deflation in the economy, then the required returns on all stocks should increase.
• C)If a company's beta were cut in half, then its required rate of return would also be halved.
• D)If the risk-free rate rises by 0.5% but the market risk premium declines by that same amount, then the required rates of return on an average stock will remain unchanged, but required returns on stocks with betas less than 1.0 will rise.

---

Definitions:

Achievable Goals

Objectives that can realistically be accomplished within a given timeframe and with available resources.

McGregor

Douglas McGregor, an American social psychologist who proposed the Theory X and Theory Y concepts of employee motivation and management.

Theory Y

A management concept based on the belief that employees are intrinsically motivated to work and can be trusted with responsibility and autonomy.

Participative Management

A management style that encourages the involvement and contribution of all employees in decision-making processes.