Nile Food's stock has a beta of 1.4, while Elba Eateries' stock has a beta of 0.7. Assume that the risk-free rate, rRF, is 5.5% and the market risk premium, (rM - rRF), equals 4%. Which of the following statements is CORRECT?
A. If the risk-free rate increases but the market risk premium remains unchanged, the required return will increase for both stocks but the increase will be larger for Nile since it has a higher beta.
B. If the market risk premium increases but the risk-free rate remains unchanged, Nile's required return will increase because it has a beta greater than 1.0 but Elba's required return will decline because it has a beta less than 1.0.
C. Since Nile's beta is twice that of Elba's, its required rate of return will also be twice that of Elba's.
D. If the risk-free rate increases while the market risk premium remains constant, then the required return on an average stock will increase.
E. If the market risk premium decreases but the risk-free rate remains unchanged, Nile's required return will decrease because it has a beta greater than 1.0 and Elba's will also decrease, but by more than Nile's because it has a beta less than 1.0.
Answer: D
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How do operations and human resources functions contribute to meeting the needs of service customers?
What will be an ideal response?
A(n) ________ is a clause in an insurance policy that provides that insurance proceeds are payable only after the insured has paid a specified amount toward the damage or loss
A) incontestability clause B) coinsurance clause C) exclusions from coverage clause D) deductible clause
Dick's Sporting Goods offers its customers the opportunity to sign up for a Scorecard which allows them to earn points on purchases. After a certain number of points are earned, the customer receives a cash award. In addition, the Scorecard entitles customers to member-only savings. This is an example of a ________ program.
Fill in the blank(s) with the appropriate word(s).