Which of the Following Statements Is CORRECT

question 88

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, (rm - rrf).
• E) beta is measured by the slope of the security market line.

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Definitions:

P-value

A statistical measure indicating the probability of obtaining the observed results, or more extreme, assuming the null hypothesis is true.

ANOVA Table

A table used to summarize the data analysis for an Analysis of Variance, showing sources of variance, degrees of freedom, sum of squares, mean squares, and the F-statistic.

F-ratio

A statistical measure used in ANOVA testing that compares the variances between groups to variances within groups.

P-value

A statistic that measures the probability of obtaining test results at least as extreme as the results actually observed, assuming that the null hypothesis is correct.