Question: 1.In the capital asset pricing model, the expected return on an asset with a beta of zero is the: A.market risk premium. B.risk-free rate of

1.In the capital asset pricing model, the expected return on an asset with a beta of zero is the:

A.market risk premium.

B.risk-free rate of interest.

C.market risk premium, less the risk-free rate of interest.

D.risk-free rate of interest, plus the market risk premium.

1.If corporate tax rates were increased, such that the marginal tax rate for most companies goes from 35 percent to 45 percent, this increase on the after-tax cost of debt:

A.increases the cost of debt.

B.decreases the cost of debt.

C.does not affect the cost of debt.

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