Which of the following statements is CORRECT? A) If the risk-free rate rises, then the market risk premium must also rise. B) If a company's beta is halved, then its required return will also be halved. C) If a company's beta doubles, then its required return will also double. D) The slope of the security market line is equal to the market risk premium, (r_M - r_RF). E) Beta is measured by the slope of the security market line.

Question

Quizplus · Accepted Answer

The slope of the security market line (SML) is indeed equal to the market risk premium, which is the difference between the expected market return and the risk-free rate.

Which of the Following Statements Is CORRECT