11.

The value of a common stock

Select one:

a. is determined by the SEC.

b. does not change over time.

c. is equal to the present value of all expected cash flows in the future.

d. is equal to the risk-free rate plus the risk premium.

12.

According to the capital asset pricing model, the required return of the stock

Select one:

a. is equal to the risk-free rate plus beta multiplied by the risk premium.

b. is equal to the present value of all the future cash flows.

c. is equal to the firm specific risk.

d. is equal to the risk-free rate and the risk-premium.

13.

The value of the dollar will decline, with all other factors remaining the same, relative to a foreign currency when

Select one:

a. U.S. inflation decreases.

b. U.S. inflation increases.

c. foreign interest rates decline.

d. supply of dollars increases.

14.

Individuals can participate in owning a diversified investment and minimizing risk by buying shares of ____.

Select one:

a. common stocks

b. high beta stocks

c. an IPO

d. mutual funds

15.

The beta of the stock measures

Select one:

a. the return the investors require to get with over the risk free rate.

b. the variability of the stock s return relative to the entire stock market.

c. the required return by the investor.

d. the risk of the stock relative to the industry the company belongs.

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Please answer ALL correctly!

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