An Increase in Nondiversifiable Risk

question 105

Multiple Choice

An increase in nondiversifiable risk

• A) would cause an increase in the beta and would lower the required return.
• B) would have no effect on the beta and would, therefore, cause no change in the required return.
• C) would cause an increase in the beta and would increase the required return.
• D) would cause a decrease in the beta and would, therefore, lower the required rate of return.

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