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:

Standard Deviation

A statistical measure that quantifies the dispersion or variation of a set of numerical values.

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A type of dish often consisting of grilled or fried fish, served on a tortilla with various accompaniments like lettuce, salsa, and avocado.

Postponement

A strategy in supply chain management where the finalization of the product or shipment is delayed until the last possible moment to better match demand.

Large Fraction

A significant portion or part of a whole.