An Increase in the Beta of a Corporation Indicates ________

question 9

Multiple Choice

An increase in the beta of a corporation indicates ________, and, all else being the same, results in ________.

• A) a decrease in risk; a higher required rate of return and hence a lower share price
• B) an increase in risk; a higher required rate of return and hence a lower share price
• C) a decrease in risk; a lower required rate of return and hence a higher share price
• D) an increase in risk; a lower required rate of return and hence a higher share price

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Definitions:

Commodity X

A placeholder name for a generic commodity or product in economic models or discussions.

Commodity Y

A generic placeholder term used to refer to any tradable item that satisfies wants or needs, but without specifying the item.

Marginal Rate of Substitution

The speed at which a consumer is prepared to exchange one product for a different one while keeping their level of satisfaction constant.

Snails

Slow-moving, gastropod mollusks with a spiral shell, some species of which are eaten as delicacy.