Based on the CAPM, the ____ the beta of a project, the ____ the required rate of return on that project.
A) higher; higher
B) lower; higher
C) higher; lower
D) lower; higher AND higher; lower
E) None of these are correct.

Question

Quizplus · Accepted Answer

According to the CAPM, the higher the beta of a project, the higher the required rate of return on that project. Therefore, choice A is correct, as it states that both the beta and the required rate of return are higher. Choices B, C, D, and E are incorrect.

Based on the CAPM, the ____ the Beta of a Project