Assume that 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. If a stock has a negative beta, its required return must also be negative.
C. An index fund with beta = 1.0 should have a required return less than 11%.
D. If a stock's beta doubles, its required return must also double.
E. An index fund with beta = 1.0 should have a required return greater than 11%.
Answer: A
You might also like to view...
The balance of the account is determined by
A) adding all of the debits to all of the credits. B) always subtracting the debits from the credits. C) always subtracting all of the credits from the debit. D) adding all of the debits, adding all of the credits, and then subtracting the smaller sum from the larger sum.
Companies that utilize long distribution channels are usually unable or unwilling to perform
channel functions. Indicate whether the statement is true or false
No large companies have used cause-related marketing so far
Indicate whether the statement is true or false a. True b. False
Which of the following is an impact of demand management activities on human resources?
a. Demand influences capital investments. b. Demand impacts new product introductions. c. Demand influences supply chain design. d. Demand determines employee head count and overtime for current workers.