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Author Question: Which of the following statements is correct? (Read 88 times)

nanna

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on: Aug 7, 2023
Which of the following statements is correct?

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Suppose you plotted the returns of a given stock against those of the market, and you found that the slope of the regression line was negative. The CAPM would indicate that the required rate of return on the stock should be less than the risk-free rate for a well-diversified investor, assuming investors in the market expect the observed relationship to continue on into the future.


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The SML shows the relationship between companies’ required returns and their unsystematic risks. The slope and intercept of this line can be influenced by a firm’s managers, but the position of the company on the line cannot be influenced by managers.


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The slope of the SML is determined by the risk-free rate.


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If a company increases its use of debt, this is likely to cause the slope of its SML to increase, indicating a higher required return on the stock.

Financial Management: Theory and Practice ¦ Brigham, Ehrhardt, Gessaroli, Nason ¦ 4th Edition
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Marked as best answer by nanna on Aug 7, 2023

JulianneMu

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Reply #1 on: Aug 7, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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nanna

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Reply 2 on: Aug 7, 2023
Great answer, keep it coming :)

raenoj

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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