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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Share

An individual portion of ownership in a corporation, represented by a stock.

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An official responsible for keeping a record, such as of a company's shareholders or university student enrollments.

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State regulations are legal requirements established by individual states that govern the operation of businesses, aiming to protect the public interest.

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Legal entities that are separate and distinct from their owners, providing limited liability protection, and have the ability to raise capital through the issuance of stocks.