FIN 534 RANK Change The World /fin534rank.com FIN 534 RANK Change The World /fin534rank.com | Page 93

Which of the following statements is CORRECT? (Assume that
the risk-free rate is a constant.)
Correct Answer:
Question 6
During the coming year, the market risk premium (rM − rRF), is
expected to fall, while the risk-free rate, rRF, is expected to remain the
same. Given this forecast, which of the following statements is
CORRECT?
Correct Answer:
Question 7
2 out of 2 points
Stock A's beta is 1.5 and Stock B's beta is 0.5. Which of the
following statements must be true, assuming the CAPM is correct.