Question
In: Finance
Which one of the following statements is INCORRECT? Group of answer choices Systematic risk of a...
Which one of the following statements is INCORRECT?
Group of answer choices
Systematic risk of a security is equal to the value of its beta coefficient
Market risk premium is the excess market rate of return over the risk-free rate of return
Market yield from government bonds indicates the risk-free rate of return
As per CAPM, the security risk premium is affected by the beta coefficient of the security
Solutions
Expert Solution
Statement D is incorrect
As per CAPM, the security risk premium is affected by the market rate of return and the risk free rate. The beta coefficient of the security does not affect the security risk premium.
Statement A is correct Systematic risk of a security is equal to the value of its beta coefficient. Beta measures the systematic risk of the security.
Statement B is correct Market risk premium is the excess market rate of return over the risk-free rate of return.
Statement C is correct Market yield from government bonds indicates the risk-free rate of return because the government is not expected to default
jeff jeffy answered 2 years agoRelated Solutions
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