Which of the Following Statements Is CORRECT

question 56

Multiple Choice

Which of the following statements is CORRECT?

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

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Definitions:

Mission

The fundamental purpose or objective of an organization, clearly stating its reasons for existence and guiding its strategies and actions.

Business Incubator

A facility that offers space, shared services, and advice to help get small businesses started.

Limited Liability Corporation

A corporate framework that merges the direct taxation benefit of sole proprietorships or partnerships with the corporation's advantage of limited liability.

Partnership

A legal and business relationship between two or more people who collaborate and share the responsibilities, profits, and losses of running an enterprise.