change in its beta is likely to affect the required rate of return on a stock, which implies that a change in beta will likely have an impact on the stock's price, other things held constant.

Question

Quizplus · Accepted Answer

This is true because the required rate of return is calculated using the Capital Asset Pricing Model (CAPM), which takes into account the stock's beta. An increase in beta will increase the required rate of return, which will lower the stock's price, and vice versa.

Change in Its Beta Is Likely to Affect the Required