Question: If the risk-free rate stayed the same while the expected return to the market portfolio decreased, which of the following would the CAPM predict? A.

If the risk-free rate stayed the same while the expected return to the market portfolio decreased, which of the following would the CAPM predict?

A. The expected return to all stocks would decrease.

B. The expected return to stocks with betas below one would increase.

C. The expected return to stocks with betas above one would increase

D. Both b. and c. would occur.

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