29) 29) If a firm uses the same company cost of capital for evaluating all projects, which situation(s) will likely occur? A) The firm will accept poor high-risk projects only. B) The firm will reject good low-risk projects and will accept poor high rieb The firm will reject good low-risk projects only. firm will reject good low-risk projects, accept poor high-risk projects, and accept poor high-risk projects. s for Project M are Co --1,000; 1 +200; C2 - +700; and C3 - +698, 30) 30) If the cash flows for Project calculate the IRR for the project. A) 19 percent B) 23 percent 17 percent D) 21 percent 31) 31) S has a standard deviation of return of 10 percent. Stock Y has a standard i on of return of 20 percent. The correlation coefficient between the two stocks is If you invest 60 percent of your funds in stock X and 40 percent in stock Y, what is the standard deviation of your portfolio? A) 10.3 percent B) 21.0 percent 12.2 percent 12.2 percent D) 14.8 percent 32) The capital asset pricing model (CAPM) states which of the following? A) The expected rate of return on an investment is determined entirely by the risk-free rate. B) The expected rate of return on an investment is determined entirely by the risk-free rate and the market rate of return. The expected rate of return on an investment is proportional to its beta. D) The expected risk premium on an investment is proportional to its beta 33) If a stock were underpriced, it would plot A) on the -axis. on the security market line. B) below the security market line. D) above the security market line. 34) A firm owns a building with a book value of $150,000 and a market value of $250,000. If the firm uses the building for a project, then its opportunity cost, ignoring taxes, is A) $400,000. B) $250,000. $100,000 D) $150,000. 34) 35) For long-term U.S. government bonds, which risk concerns investors the most? A) Interest rate risk B) Market risk Liquidity risk D) Default risk