An increase in systematic risk would cause a(n) ______________ in beta and a(n) ______________ in the required rate of return
A)increase,increase
B)decrease,increase
C)increase,decrease
D)decrese,decrease

Question

Quizplus · Accepted Answer

Systematic risk is a measure of how much an asset's return fluctuates with the overall market. Beta, the measurement of systematic risk, measures the asset's sensitivity to market movements. If systematic risk increases, the asset's beta would also increase as it is more sensitive to market movements. As a result, the required rate of return would also increase to compensate for the higher risk.

An Increase in Systematic Risk Would Cause A(n) ______________ in Beta