Share X has ( ) . = 4.0, which means that it is considered four times riskier than the average share, or the share market as a whole.According to the capital asset pricing model, Share X should earn
A) a total return that is four times greater than the market return, that is, rX = 4 * rM.
B) a risk premium that is four times greater than the market risk premium-that is, RPX = 4 * RPM, which means that rX B kRF = 4 * (rM B kRF) .
C) a return that is less than the market return (rM) because, all else equal, the high risk associated with Share X will cause its value to decrease.
D) the risk-free rate of return (rRF) .
E) None of the above is correct.
Correct Answer:
Verified
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