Question
1.) Which of the following conclusions would be true if you earn a higher rate of return on your investments? Select one: a. Your rate
1.) Which of the following conclusions would be true if you earn a higher rate of return on your investments?
Select one:
a. Your rate of return would not have any effect on the present value of any sum to be received in the future.
b. The lower the present value would be for any lump sum you would receive in the future.
c. The greater the present value would be for any lump sum you would receive in the future.
d. The greater the present value would be for any annuity you would receive in the future.
2.) White Company stock has a beta of 2 and a required return of 23%, while Black Company stock has a beta of 1.0 and a required return of 14%. The standard deviation of returns for White Company is 10% more than the standard deviation for Black Company. The risk free rate of return according to the CAPM is
Select one:
a. 5%.
b. 6%.
c. 4%.
d. impossible to determine with the information given
3.) If the interest rate is positive, then the future value of an annuity due will be greater than the future value of an ordinary annuity.
Select one:
True
False
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started