Assume That the Risk-Free Rate Is 5

question 131

Multiple Choice

Assume that the risk-free rate is 5%. Which of the following statements is CORRECTσ

• A) if a stock's beta doubled, its required return under the capm would also double.
• B) if a stock's beta doubled, its required return under the capm would more than double.
• C) if a stock's beta were 1.0, its required return under the capm would be 5%.
• D) if a stock's beta were less than 1.0, its required return under the capm would be less than 5%.
• E) if a stock has a negative beta, its required return under the capm would be less than 5%.

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Definitions:

Incapacitated

Refers to the state where an individual or entity is legally unable to make their own decisions due to mental or physical disability.

Partially Disclosed

Refers to a situation where some but not all relevant information has been revealed.

Indemnification

Payment for loss or damage suffered.

Fiduciary Relationship

A relationship based on trust such as exists between an attorney and a client, an agent and a principal, a guardian and a ward, a trustee and a beneficiary, or a director and a corporation.