15. The option that is foregone so that an asset can be utilized by a specific project is referred to as the a. sunk cost b. erosion csalvage value d. opportunity cost 16. McMillan's Corporation has a beta equal to 2.3 and a required return of 15% based on the CAPM. If the risk-free rate of return is 3.5%, what is the market risk premium? a. 8.05% b. 11.50% c. 6.95% d. 5.00% 17. A year ago, one dollar could have bought 0.89 euros. Today, one dollar can buy 0.85 euros Based on this information, which of the following statements is TRUE. a. The dollar has appreciated against the euro. b. The dollar is selling at a forward premium against the euro. c. The euro has appreciated against the dollar. d. The dollar is selling at a forward discount against the euro. 18. Which of the following is NOT an advantage of going public or an initial public offering (IPO)? a. Possible loss of control b. Ease of raising funds later c. Establish value for the firm d. Diversification for owners 19. If the yield curve is inverted (i.e., downward sloping), what is the yield (interest rate) on a 10-year Treasury bond, relative to that on a one-year Treasury bond? a. It is impossible to tell without knowing the relative risks of the two bonds. b. The yield on the 10-year bond will always be higher than the yield on the one-year bond because of the maturity premium. c. The yield on the 10-year bond is less than the yield on the one-year bond. d. The yields on the two bonds are equal