Which of the Following Statements Is Correct? (Assume That the Risk-Free

question 86

Multiple Choice

Which of the following statements is correct? (Assume that the risk-free rate is a constant.)

• A)If the market risk premium increases by 1%, then the required return will increase for stocks that have a beta greater than 1.0, but it will decrease for stocks that have a beta less than 1.0.
• B)The effect of a change in the market risk premium depends on the slope of the yield curve.
• C)If the market risk premium increases by 1%, then the required return on all stocks will rise by 1%.
• D)If the market risk premium increases by 1%, then the required return will increase by 1% for a stock that has a beta of 1.0.

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Definitions:

Moral Development

The process by which individuals learn to differentiate right from wrong, acquire virtues, and make ethical decisions as they grow and mature.

Defer

To postpone or delay an action or decision to a later time.

Moral Intelligence

The capacity to understand principles of right and wrong and to behave according to these principles, leading to ethical decision making.

Mental Capacity

An individual's ability to make decisions or understand information, particularly in legal and medical contexts.