Which of the Following Statements Is CORRECT

question 120

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:

Presentment

The formal presentation of a financial instrument, such as a check or draft, for payment or acceptance.

Transfer Warranties

Legal assurances provided by a seller about the quality and ownership of goods being sold, particularly that the goods are free from any security interest or other lien not disclosed at the time of sale.

Agent

An individual or entity authorized to act on behalf of another, called the principal, in transactions or other matters.

Reacquisition

Reacquisition refers to the act of regaining possession or control of something that was previously sold, lost, or given away.