Which of the Following Statements Is Correct

question 6

Multiple Choice

Which of the following statements is correct?

• A)If investors become more risk averse but r_RF does not change, then the required rate of return on high-beta stocks will rise and the required return on low-beta stocks will decline, but the required return on an average-risk stock will not change.
• B)An investor who holds just one stock will generally be exposed to more risk than an investor who holds a portfolio of stocks, assuming the stocks are all equally risky.
• C)The slope of the yield curve has no effect on the slope of the SML.
• D)Assume that the required rate of return on the market, r_M, is given and fixed at 10%. If the yield curve were upward sloping, then the Security Market Line (SML) would have a steeper slope if 1-year Treasury securities were used as the risk-free rate than if 30-year Treasury bonds were used for r_RF.

Grasp the concepts of operator precedence and associativity.

Recognize control statements in Java, including loops and conditional statements.

Understand how to terminate a program or loop iteration appropriately.

Identify and use logical, relational, and arithmetic operators in Java.

---

Definitions:

Exchange

A marketplace where securities, commodities, derivatives, and other financial instruments are traded.

Rate of Return

The percentage gain or loss on an investment over a specified period, expressing the compound annual growth rate.

Initial Margin

The minimum amount of equity required to initiate a position in the securities market, often expressed as a percentage of the total investment.

Sell the Stock

The action of disposing of shares in a company.