Which of the Following Statements Is Correct

question 132

Multiple Choice

Which of the following statements is correct?

• A)A graph of the SML as applied to individual stocks would show required rates of return on the vertical axis and standard deviations of returns on the horizontal axis.
• B)The CAPM has been thoroughly tested, and the theory has been confirmed beyond any reasonable doubt.
• C)If investors become more risk averse, then (1) the slope of the SML would increase and (2) the required rate of return on low-beta stocks would increase by more than the required return on high-beta stocks.
• D)An increase in expected inflation, combined with a constant real risk-free rate and a constant market risk premium, would lead to identical increases in the required return on a riskless asset and on an average stock, other things held constant.

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Definitions:

Psychoanalytic Theory

A body of theories originating from Sigmund Freud, which posits that human behavior is deeply influenced by unconscious motives and conflicts.

Social Learning Theory

A theory that proposes individuals learn behaviors, values, and attitudes through observation, imitation, and modeling from others within their culture or environment.

Nonverbal Communication

Communication by means other than speech, as by touch, gestures, use of distance, eye movements, and so on.

Gender Differences

Refers to the distinctions in characteristics, roles, and behaviors culturally associated with being male or female.