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Suppose the risk-free return (KRF) equals 5 percent, the required return on the market (kM) equals 11 percent and the required rate of return for
Suppose the risk-free return (KRF) equals 5 percent, the required return on the market (kM) equals 11 percent and the required rate of return for Stock A (KA) equals 14.2 percent. Which of the following statements is most CORRECT? A. If the market were to go down 10 percent, Stock A would be expected to go down 20 percent. B. If the market were to go up 10 percent, Stock A would be expected to go down 15 percent. C. Stock A is not as risky as the overall stock market. D. The Market is roughly 53% more volatile than Stock A E. If the market were to go down 10 percent, Stock A would be expected to go down 15.33 percent.
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