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Question
Assume that the risk-free rate is 6% and the market risk premium is 5%. Given this information, which of the following statements is CORRECT?a. If a stock has a negative beta, its required return must also be negative.
b. An index fund with beta = 1.0 should have a required return less than 11%.
c. If a stock's beta doubles, its required return must also double.
d. An index fund with beta = 1.0 should have a required return greater than 11%.
e. An index fund with beta = 1.0 should have a required return of 11%.
Answer
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