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:

Inverted Pyramid

A writing structure often used in news reporting and journalism that presents the most important information first, followed by supporting details.

Organizational Style

The method or approach a business or individual uses to arrange and manage work or content.

Short Subject Line

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Passive Voice

A grammatical construction where the object of an action becomes the subject of the sentence, often obscuring who performs the action.