25.The yield to maturity is the single interest rate that equates the PV of a securitys cash flows to its price. The YTM is often interpreted as an estimate of the average rate of return to an investor who purchases a bond and holds it until maturity. The realized YTM incorporates the reinvestment rates and reinvestment rate risk into the equation.

True

False

26. Modified duration is a natural measure of the bonds exposure to anticipated changes in interest rates. It depicts the change in price from the (negative) product of the duration measure and the change in interest rates.

True

False

27. Alpha is the difference between the actual and expected return on a stock. Alphas can be positive, zero, or negative and help to determine the value of security analysis. Alpha can be visualized via the Security Market Line.

True

False

28.In the extended Labor CAPM, the CAPM measure of systematic risk, beta, is replaced by an adjusted beta that also accounts for covariance with the portfolio of aggregate human capital. Despite the complications inherent in any extension of the CAPM with a labor component, labor is an important consideration in explaining the systematic risk of financial securities

True

False