1. Unsystematic risk of common stocks ____________________.

Select one:

a. should have positive effect on their expected return according to the CAPM

b. should have negative effect on their expected return according to the CAPM

c. contributes more to the risk of the market portfolio than high systematic risk

d. should have no effect on their expected return according to the CAPM

2.Assume you invested $1,000 in stock of XYZ two years ago. If the percent returns were +15% and -20%, in the first and second year, respectively, then your 2-year holding period return was $920.

Select one:

True

False

3. Which of the following statements is true?

Select one:

a. All of THESE

b. Under straight voting, shareholders with majority of votes can choose all the members to the board of directors.

c. Under cumulative voting, minority shareholders have the possibility to choose some members to the board of directors.

d. Proxy is a legal grant of authority by a shareholder to someone else to vote his/her shares.

4. A one year GIC certificate has a real interest rate of 2%. If the inflation is rate is 1%, what is the exact value of the nominal interest rate?

Select one:

a. 0.99%

b. 3.02%

c. 2.98%

d. 3.00%

e. None of THESE