24 and 25

second

Bo Stock Alpha O Stock Gamma QUESTION 24 Picture, you can the security Market Line (SML) introduced in Chapter 2 Which of the following statements is NOT rect? A The slope of the SML is equal to the market is premium O in equilibriumstocks with betas greater that will on the SML and have higher required rates of return to the red rotum on the market bu) OC The vertical or used to pol the required rate of return on a stock for secu On They recept of the SML to the tree rate OL. The Moon is used to ploto risk a stock for outly) as memured by its standard deviation QUESTIONS Which of the following is NOT a generally recommended upplication of options or option theory to enhance shareholder value ander redacer? O Ang stock options as a part of compensation plans Ophions as a management tool Oceving te dubtos a type of option Owing compromising an option Og options to speciale on future price movements JESTION 24 uro, if you can, the Security Market Line (SML) introduced in Chapter 2 Which of the following statements is NOT correct? The slope of the SML is equal to the market risk premium 8. In equilibrium, stocks with betas greater than 1 will lie on the SMLand have higher required rates of return than the roquired return on the market (m) C. The vertical or y-axis is used to plot the required rate of return on a stock (or security) D. The y-intercept of the SML is equal to the risk free rate t. The horizontal or x-axis is used to plot the risk of a stock (or secunty) as measured by its standard deviation, QUESTION 25 Which of the following is NOT a generally recommended application of options or option theory to enhance shareholder value and/or reduce risk? A using stock options as a part of compensation plans e using options as a risk management tool c evaluating convertible debt as a type of option D.Viewing certain capital projects as having an option value Os using options to speculate on future price movements QUESTION 26