Assume that the risk-free rate is 5%. Which of the followingstatements is CORRECT?

	a.	If a stock's beta were less than 1.0, its required return underthe CAPM would be less than 5%.
	b.	If a stock's beta doubled, its required return under the CAPMwould more than double.
	c.	If a stock's beta were 1.0, its required return under the CAPMwould be 5%.
	d.	If a stock has a negative beta, its required return under theCAPM would be less than 5%.
	e.	If a stock's beta doubled, its required return under the CAPMwould also double.

Answer rating: 100% (QA)

The correct answer is d If a stock has a negative beta its required return under t... View the full answer