Assume that the risk-free rate is 5%. Which of the following statements is CORRECT? a. If a stock's beta doubled, its required return under the CAPM would also double. b. If a stock's beta doubled, its required return under the CAPM would more than double. c. If a stock's beta were 1.0, its required return under the CAPM would be 5%. d. If a stock's beta were less than 1.0, its required return under the CAPM would be less than 5%. e. If a stock has a negative beta, its required return under the CAPM would be less than 5%.
Assume that the risk-free rate is 5%. Which of the following statements is CORRECT? a. If a stock's beta doubled, its required return under the CAPM would also double. b. If a stock's beta doubled, its required return under the CAPM would more than double. c. If a stock's beta were 1.0, its required return under the CAPM would be 5%. d. If a stock's beta were less than 1.0, its required return under the CAPM would be less than 5%. e. If a stock has a negative beta, its required return under the CAPM would be less than 5%.
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
Problem 17PROB
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Question
Assume that the risk-free rate is 5%. Which of the following statements is CORRECT?
a. If a stock's beta doubled, its required return under the CAPM would also double.
b. If a stock's beta doubled, its required return under the CAPM would more than double.
c. If a stock's beta were 1.0, its required return under the CAPM would be 5%.
d. If a stock's beta were less than 1.0, its required return under the CAPM would be less than 5%.
e. If a stock has a negative beta, its required return under the CAPM would be less than 5%.
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