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Which of the following statements is incorrect? A. If investors expect a zero rate of inflation, then the nominal rate of return on a very
Which of the following statements is incorrect?
A. | If investors expect a zero rate of inflation, then the nominal rate of return on a very short-term U.S. Treasury bond should be equal to the real risk-free rate. | ||
B. | If the pure expectations theory is correct, a downward sloping yield curve indicates that interest rates are expected to decline in the future. | ||
C. | "Risk aversion" implies that investors require higher expected returns on riskier versus less risky securities. | ||
D. | A stock with above-average market risk will tend to be more volatile than an average stock, and its beta will be greater than 1.0. | ||
E. | All of the statements above are correct. |
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