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World United stock currently plots on the security market line and has a beta of 1.04. Which one of the following will increase that stocks rate of return without affecting the risk level of the stock, all else constant?
a. an increase in the risk free rate
b. decrease in the security's beta
c. overpricing of the stock in the market place
d. INcrease in the market risk to reward ratio
e. decrease in the market rate of return

Respuesta :

Answer: D. Increase in the market risk to reward ratio

Explanation:

From the information given, we are informed that World United stock currently plots on the security market line and has a beta of 1.04

It should be noted that an increase in the market risk to reward ratio will increase that stocks rate of return without affecting the risk level of the stock, all else constant.

Therefore, the correct option is D.

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