An increase in the Treasury Bill rate ________.
A) has no effect on the required rate of return of a common stock
B) increases the required rate of return of a common stock
C) doubles the required rate of return of a common stock
D) increases the beta of a common stock

Question

Quizplus · Accepted Answer

An increase in the Treasury Bill rate is considered to be a risk-free rate of return. Since the required rate of return of a common stock is influenced by overall market conditions and risk-free rate of return, it will increase the required rate of return of a common stock.

An Increase in the Treasury Bill Rate ________