1. According to CAPM, cost of common equity can reduce if: I. risk-free rate is lower II. beta is lower III market risk premium is higher IV. market return is higher

a) I and II only

b) III and IV only

c) I only

d) II and IV only

e) III only

2. Which of the following will have a higher yield to maturity?

a) Not enough information given to determine the answer.

b) A discount bond

c) A premium bond

d) A par bond