1. Historical evidence shows that the risk premium of Canadian bonds is less than the risk premium of Canadian stocks.

Select one:

True

False

2. The required rate of return (CAPM) is the rate that makes the NPV of a project equal to zero.

Select one:

True

False

3.Stock A has an expected return of 20%, and stock B has an expected return of 4%. However, the risk of stock A as measured by its variance is 2 times that of stock B. If the two stocks are combined equally in a portfolio, what is the portfolio's expected return?

Select one:

a. None of THESE

b. 20%

c. Greater than 20%

d. 4%

e. 12%

4