A) The portfolio's beta is less than 1.2.
B) The portfolio's expected return is 15%.
C) The portfolio's standard deviation is greater than 20%.
D) The portfolio's beta is greater than 1.2.
Correct Answer
verified
True/False
Correct Answer
verified
Multiple Choice
A) If a company with a high-beta stock merges with a low-beta company, the best estimate of the new merged company's beta is 1.0.
B) The beta of an "average stock," or "the market," can change over time, sometimes drastically.
C) If a newly issued stock does not have a past history that can be used as a basis for calculating beta, then we should always estimate that its beta will turn out to be 1.0. This is especially true if the company finances with more debt than the average firm.
D) During a period when a company is undergoing a change such as increasing its use of leverage or taking on riskier projects, the calculated historical beta may be drastically different than the "true" or "expected future" beta.
Correct Answer
verified
Multiple Choice
A) 5.10%
B) 5.23%
C) 5.36%
D) 5.49%
Correct Answer
verified
Multiple Choice
A) The required return on a stock with beta > 1.0 will increase.
B) The return on the market will remain constant.
C) The return on the market will increase.
D) The required return on a stock with beta < 1.0 will decline.
Correct Answer
verified
True/False
Correct Answer
verified
True/False
Correct Answer
verified
True/False
Correct Answer
verified
True/False
Correct Answer
verified
Multiple Choice
A) The required returns on all stocks have fallen, but the decline has been greater for stocks with lower betas.
B) The required returns on all stocks have fallen, but the fall has been greater for stocks with higher betas.
C) Required returns have increased for stocks with betas greater than 1.0 but have declined for stocks with betas less than 1.0.
D) The required returns on all stocks have fallen by the same amount.
Correct Answer
verified
Multiple Choice
A) 14.16%
B) 14.53%
C) 14.90%
D) 15.27%
Correct Answer
verified
Multiple Choice
A) 0.4360
B) 0.4714
C) 0.5068
D) 0.5448
Correct Answer
verified
True/False
Correct Answer
verified
Multiple Choice
A) An index fund with beta = 1.0 should have a required return of 11%.
B) An index fund with beta = 1.0 should have a required return less than 11%.
C) If a stock's beta doubles, its required return must also double.
D) An index fund with beta = 1.0 should have a required return greater than 11%.
Correct Answer
verified
Multiple Choice
A) If a stock has a negative beta, its required return under the CAPM would be less than 5%.
B) If a stock's beta doubled, its required return under the CAPM would also double.
C) If a stock's beta were less than 1.0, its required return under the CAPM would less than 5%.
D) If a stock's beta were 1.0, its required return under the CAPM would be 5%.
Correct Answer
verified
Multiple Choice
A) 14.03%
B) 14.38%
C) 14.74%
D) 15.10%
Correct Answer
verified
Multiple Choice
A) 1.73
B) 1.82
C) 1.91
D) 2.00
Correct Answer
verified
Multiple Choice
A) Stock A has more market risk than Portfolio AB.
B) Stock A has more market risk than Stock B but less stand-alone risk.
C) Portfolio AB has more money invested in Stock A than in stock B.
D) Portfolio AB has the same amount of money invested in each of the two stocks.
Correct Answer
verified
Multiple Choice
A) If a company's beta doubles, then its required rate of return will also double.
B) Other things held constant, if investors suddenly became convinced that there would be deflation in the economy, then the required returns on all stocks should increase.
C) If a company's beta were cut in half, then its required rate of return would also be halved.
D) If the risk-free rate rises by 0.5% but the market risk premium declines by that same amount, then the required rates of return on an average stock will remain unchanged, but required returns on stocks with betas less than 1.0 will rise.
Correct Answer
verified
True/False
Correct Answer
verified
Showing 101 - 120 of 137
Related Exams