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.

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Definitions:

Stored Items

Objects or information kept or filed away for future use or reference.

Short-term Memory

Short-term memory refers to the capacity for holding a small amount of information in an active, readily available state for a short period of time.

Working Memory

The memory subsystem that we use when we try to understand information, remember it, or use it to solve a problem or communicate with someone.

Tertiary Memory

A term sometimes used to describe long-term storage of information that is not in active use but can be accessed when required.