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1. Which of the following statements about the risk-free asset is correct? e risk-free asset is defined as an asset for which there is uncertainty

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1. Which of the following statements about the risk-free asset is correct? e risk-free asset is defined as an asset for which there is uncertainty regarding the rate of return The standard deviation of return for the risk-free asset is to zero The standard deviation of return for the risk-free asset cannot be zero, since zero is undefined. Choices a and b. Choices a and c 2. When identifying undervalued and overvalued assets, which of the following statements is false? n asset is properly valued if its estimated rate of return is equal to its required rate return n asset is considered overvalued if its estimated rate of return is below its required e of return n asset is considered undervalued if its estimated rate of return is above its ired rate of return n asset is considered overvalued if its required rate of return is below its estimated e of return. of the above (that is, all are true statements) 3. Beta is a measure of ific ris risk Diversifiable risk Systematic risk 4. Calculate the expected return for C Inc. which has a beta of 0.8 when the risk free rate is 0.04 and you expect the market return to be 0.12 10% 60% 10.40% 1.20% . 12.60%

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