Assume That the Risk-Free Rate Remains Constant, but the Market

question 71

Multiple Choice

Assume that the risk-free rate remains constant, but the market risk premium declines.Which of the following is most likely to occur?

• A) The required return on a stock with beta > 1.0 will increase.
• B) The return on "the market" will remain constant.
• C) The return on "the market" will increase.
• D) The required return on a stock with beta < 1.0 will decline.
• E) The required return on a stock with beta = 1.0 will not change.

---

Definitions:

Influence Tactic

Strategies or methods used by an individual to persuade or guide others' behaviors and decisions in a desired direction.

Assertiveness

The characteristic of possessing confidence and assertiveness, without exhibiting aggressiveness.

Self-Promotion

The act of highlighting one's own skills, achievements, and positive attributes to advance personal or professional goals.

Self-Promotion

The act of highlighting one's own skills and accomplishments to gain recognition or advancement.