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Time Remaining: 1. The risk-free rate is 6...

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Time Remaining: 1. The risk-free rate is 6%; Stock A has a beta of 1.0; Stock B has a beta of 2.0, and the market risk premium, rM - rRF, is positive. Which of the following statements is correct? (Points: 3) Stock B's required rate of return is twice that of Stock A. If Stock A's required return is 11%, the market risk premium is 5%. If Stock B's required return is 11%, the market risk premium is 5%. If the risk-free rate increases but the market risk premium stays unchanged, Stock B's required return will increase by more than Stock A's. If the risk-free rate remains constant but the market risk premium increases, Stock A's required return will increase by more than Stock A's.

 

Paper#3800 | Written in 18-Jul-2015

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