Currently,the Risk-Free Rate Is 6% and the Market Risk Premium

question 24

Multiple Choice

Currently,the risk-free rate is 6% and the market risk premium is 5%.Given this information,which of the following statements is correct?

• A)An index fund with beta = 1.0 should have a required return of 11%.
• B)An index fund with beta = 1.0 should have a required return less than 11%.
• C)If a stock's beta doubles, its required return must also double.
• D)An index fund with beta = 1.0 should have a required return greater than 11%.

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Definitions:

Personal Safety

Practices and precautions taken by an individual to protect themselves from harm or danger in their daily life.

Res Ipsa Loquitur

Res Ipsa Loquitur is a legal principle that suggests negligence can be presumed if the event causing harm would not typically occur without negligence.

Exclusive Control

The authority of a party to exclusively manage, direct, or govern property, an organization, or a situation, without interference from others.

Wooden Dock

A structure built on or over water out of wood, used by boats and ships for loading, unloading, and mooring.