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:

Learned Helplessness

The condition of experiencing an intense lack of control, typically resulting from a traumatic incident or persistent unsuccessful efforts.

Aversive Events

Unpleasant or harmful events or stimuli that an organism seeks to avoid or minimize.

Passive Resignation

A state of accepting or submitting without resistance, often characterized by lack of action or initiative.

Personal Control

The degree to which an individual believes they can influence their environment and the outcomes of events in their life.