Ask Question
BusinessBusiness
21 June, 04:02

Assume that in recent years both expected inflation and the market risk premium (rM - rRF) have declined. Assume also that all stocks have positive betas. Which of the following would be most likely to have occurred as a result of these changes

+5
Answers (1)
  1. 21 June, 07:45
    0
    the decline has been greater for stocks with higher betas

    Explanation:

    Since both expected inflation and the market risk premium (rM - rRF) have declined it can be said that the decline has been greater for stocks with higher betas. This is because a stocks beta indicates the volatility of the stock in comparison with the rest of the market. A value of 1 indicates that it follows the rest of the market exactly, while higher numbers indicate more volatility. Since all the stocks have positive betas then it means they are either the same or more volatile, therefore if the market is in a decline then these stocks will decline the same or with even greater momentum.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Assume that in recent years both expected inflation and the market risk premium (rM - rRF) have declined. Assume also that all stocks have ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
A project will produce an operating cash flow of $136,000 a year for three years. The initial cash outlay for equipment will be $274,000. The net aftertax salvage value of $15,000 will be received at the end of the project.
Answers (1)
Which of the following is an other comprehensive income item found in the statement of stockholders equity? a. Extraordinary items b. Earnings before income & taxes (EBIT) c. Unrealized marketable securities gains & losses d. Contingencies
Answers (1)
An electronic card that stores all the customers info in a chip is
Answers (2)
Bo signs a lease with Capri Apartments to lease a studio apartment for the next year for $650 per month. Bo and Capri have executed a (n): a) no contract. b) express contract. c) implied contract. d) simple contract.
Answers (1)
Suppose that an economy produces 2400 units of output, employing the 60 units of input, and the price of the input is $30 per unit. Refer to the information above.
Answers (1)
New Questions in Business
Which of the following is an example of arbitrage? A. A firm buys $250,000 of palladium today, with an option to sell it at $275,000 in one year if interest rates rise above 10%. B.
Answers (1)
California Fishing Company (CFC) is expected to pay a dividend next year of $50 per share. Future Dividends for CFC are expected to grow at a rate of 5% per year indefinitely.
Answers (1)
The unit of account function of money: all of the following are correct means that money makes price information more accessible requires that money be made of something valuable means that money can be used to save up purchasing power means that
Answers (1)
When a tax is placed on the buyers of cell phones, the size of the cell phone market a. increases, but the effective price received by sellers decreases. b. decreases, but the effective price received by sellers increases. c.
Answers (1)
EA12. LO 4.7During the month, Job AB2 used specialized machinery for 450 hours and incurred $500 in utilities on account, $300 in factory depreciation expense, and $100 in property tax on the factory.
Answers (1)
Home » Business » Assume that in recent years both expected inflation and the market risk premium (rM - rRF) have declined. Assume also that all stocks have positive betas. Which of the following would be most likely to have occurred as a result of these changes
Sign Up Forgot Password?