Question
31. If a change in the investment environment leads to an increase in the Risk-Free Rate while the Return on the Market Portfolio remains constant,
31. If a change in the investment environment leads to an increase in the Risk-Free Rate while the Return on the Market Portfolio remains constant, the Market Risk Premium would be expected to:
Increase.
Decrease.
Remain Unchanged.
Cannot be determined.
None of the above answers is correct.
32. If a change in the investment environment leads to an increase in the Risk-Free Rate while the Return on the Market Portfolio remains constant, then:
The Expected Return on Low Beta Stocks should increase.
The Expected Return on Low Beta Stocks should decrease.
The Expected Return on Low Beta Stocks should remain unchanged.
Cannot be determined.
None of the above answers is correct.
33. If a change in the investment environment leads to an increase in the Risk-Free Rate while the Return on the Market Portfolio remains constant, then:
The Expected Return on High Beta Stocks should increase.
The Expected Return on High Beta Stocks should decrease.
The Expected Return on High Beta Stocks should remain unchanged.
Cannot be determined.
None of the above answers is correct.
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