1. For a risk-free return rate of 5%, a market risk premium of 6%, what is the required rate of return for a security with a beta coefficient of 1.5? a. 5% b, 9% C. 14% d. cannot be determined -Select- e 2. Changing the risk-free return (inflation) a. Changes neither the y-intercept nor the slope of the security market line b. Changes only the y-intercept of the security market line c. Changes only the slope of the security market line d. Changes both the y-intercept and the slope of the security market line -Select- B 3. Changing the market risk premium a. Changes neither the y-intercept nor the slope of the security market line b. Changes only the y-intercept of the security market line c. Changes only the slope of the security market line d. Changes both the y-intercept and the slope of the security market line -Select- a 4. True or False: If a company's beta doubles, its required return doubles. a. True b. False -Select-

1. For a risk-free return rate of 5%, a market risk premlum of 6%, what is the required rate of return for a security with a beta coefficient of 1.5 ? a. 5% b, 9% c. 14% d. cannot be determined 2. Changing the risk-free return (infiation) a. Changes neither the y-intercept nor the slope of the security market line b. Changes only the y-intercept of the security market line c. Changes only the slope of the security market line d. Changes both the y-intercept and the slope of the security market line 3. Changing the market risk premium 3. Changes neither the y-intercept nor the slope of the security market line b. Changes only the y-intercept of the security market line c. Changes only the slope of the security market line d. Changes both the y-intercept and the slope of the security market line 4. True or False: If a company's beta doubles, its required return doubles. a. True b. False r=rRF+RPM beta =6%+5%1=6%+5.00%=11.00%