Assume that the risk-free rate is a constant

Assignment Help Financial Management

Reference no: EM13811501

Which of the following statements is CORRECT? (Assume that the risk-free rate is a constant.)

a. If the market risk premium increases by 1%, then the required return will increase for stocks that have a beta greater than 1.0, but it will decrease for stocks that have a beta less than 1.0.

b. The effect of a change in the market risk premium depends on the level of the risk-free rate.

c. If the market risk premium increases by 1%, then the required return will increase by 1% for a stock that has a beta of 1.0.

d. The effect of a change in the market risk premium depends on the slope of the yield curve.

e. If the market risk premium increases by 1%, then the required return on all stocks will rise by 1%

Reference no: EM13811501

Questions Cloud

Discuss about equal access to healthcare : Equal Access to Healthcare

Yield to maturity remains at its current rate : A 25-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. If the yield to maturity remains at its current rate, what will the price be 5 years from now?

Construct a magic square using a genetic algorithm : Construct a magic square using a genetic algorithm. First, generate an initial population of magic squares with random values. The fitness of each individual square is calculated based on the "flatness", that is, the degree of deviation in the sum..

The largest percentage increase in price : Assume that all interest rates in the economy decline from 10% to 9%. Which of the following bonds would have the largest percentage increase in price?

Assume that the risk-free rate is a constant : If the market risk premium increases by 1%, then the required return will increase for stocks that have a beta greater than 1.0, but it will decrease for stocks that have a beta less than 1.0. The effect of a change in the market risk premium depends..

How is channel coding done : Select a particular standard of interest to research. The 802.x ones tend to be documented the best. Complete the following for your individual project: How is channel coding done

What is the bonds nominal coupon interest rate : O'Brien Ltd.'s outstanding bonds have a $1,000 par value, and they mature in 25 years. Their nominal yield to maturity is 9.25%, they pay interest semi annually, and they sell at a price of $975. What is the bond's nominal coupon interest rate?

Evaluate the cost of the franchise versus its business poten : Business Principles Managing Financial Resources: Financial Management Go online and check the capitalization required to open a franchise of your choice, like Subway or McDonald's. Does the franchiser offer financial assistance to prospective franch..

User Account

All Pages