Which of the Following Statements Is CORRECT

question 111

Multiple Choice

Which of the following statements is CORRECT?

• A) If the risk-free rate rises, then the market risk premium must also rise.
• B) If a company's beta is halved, then its required return will also be halved.
• C) If a company's beta doubles, then its required return will also double.
• D) The slope of the security market line is equal to the market risk premium, (r_M − r_RF).
• E) Beta is measured by the slope of the security market line.

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Definitions:

Snowboards

Boards designed for descending snow-covered slopes by standing sideways on them, akin to surfing or skateboarding.

Global Business Units

Specialized business segments within a multinational company, designed to address global markets and manage international operations.

Category Managers

Professionals responsible for managing a specific category of products in a retail or wholesale setting, focusing on pricing, product assortment, and promotions.

Standardized Worldwide Pricing

A pricing strategy where a company charges the same price for its products or services across different countries, not accounting for local market conditions or costs.