Assume That the Risk-Free Rate Is 5

question 55

Multiple Choice

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

• 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:

Alienation

The feeling of being isolated and estranged from others, society, or oneself, often discussed in social, economic, and psychological contexts.

Manual Labor

Work that requires physical activity and is often characterized by hands-on tasks as opposed to mental or automated work.

Bureaucracy

An organizational structure characterized by hierarchical authority, a clear division of labor, explicit rules and procedures, and impersonality in personnel matters.

Socioemotional Relations

The aspect of human relations that involves emotional connection, empathy, and bonding among individuals within a social context.