1.Sysco Corporation has a beta of 0.71.If the returns on the market increase by 1%, what should you expect from Sysco Corporation?

A.It will go up 1%

B.It will go up .71%

C.It will go down 1%

D.It will go down .71%

2.You have invested all of your retirement funds in your company's stock, which has a beta of 1.0.When you hear on the radio that the stock market is down 150 points, what should you expect from your company stock in your retirement plan?

A.Should be a great day, your stock should be up significantly.

B.Rats! Your company stock is likely down more than the market today.

C.Your company stock is likely down with the market today in similar proportion.

D.It's anyone's guess as the market does not move at all in relation to your company stock.

3.The measure of market risk, or performance volatility, that relates the extent to which the return on an asset moves with that on the overall market is best described as:

A.Beta.

C.Covariance.

D.Standard deviation.

4.Which of the following is not an assumption of the capital asset pricing model (CAPM)?

A.Capital markets are in equilibrium.

B.Transaction costs are the same for all investors.

C.All investors can borrow or lend money at the risk-free rate of return.

D.All investors have identical expectations about expected returns, standard deviations, and correlation coefficients for all securities.

5.Which of the following would not be considered a sunk cost when performing a cash flow analysis of a new project?

A.Engineering costs to develop estimates of the eventual project cost

B.Marketing research conducted to see if this would be a viable project

C.Increased inventory the company will have to carry for the new project

D.Research and development expenses incurred coming up with the idea of the project

E.Cost of land and building to be used for the project that the company has owned for many years

6. Which of the following is not an advantage of payback period?

A.Easy to calculate

B.A useful initial screening technique

C.Considers the time value of money through the hurdle rate

D.Measures the liquidity of a project (i.e. how fast cash inflows occur)