Question
1.If an investor buys enough stocks, he or she can, through diversification, eliminate most of the company-specific and market risk in owning the stocks. True.
1.If an investor buys enough stocks, he or she can, through diversification, eliminate most of the company-specific and market risk in owning the stocks. True. or False
2.Which of the following statements about Security Market Line (SML) equation ri = rRF + (rM rRF)bi is true?
| ri is the expected rate of return for stock i. | ||
| rRF is the real risk-free rate. | ||
| bi is the beta of the market portfolio. | ||
| The risk premium on the stock equals to ri - rRF. |
3.
Which of the following statements about annuity is true?
| The present value of annuity due is smaller than the present value of the similar ordinary annuity. | ||
| The future value of annuity due is smaller than the future value of the similar ordinary annuity. | ||
| The future value of annuity due is smaller than the present value of the similar ordinary annuity. | ||
| None of the above statements is correct. |
4.
Any change in beta is likely to affect the required rate of return on a stock, which implies that a change in beta will likely have an impact on the stock's price.
True
False
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Pricing In General Insurance
Authors: Pietro Parodi
2nd Edition
0367769034,1000860833
