Q3. Chapters 9-12

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?

Group of answer choices

*An index fund with beta = 1.0 should have a required return of 11%.

*If a stock has a negative beta, its required return must also be negative.

*An index fund with beta = 1.0 should have a required return less than 11%.

*If a stock's beta doubles, its required return must also double.

*An index fund with beta = 1.0 should have a required return greater than 11%.