6. Which of the following are economic properties of a utility function? i. It must be consistent with the principle of non-satiation ii. It must make some assumption about investors' appetite for risk iii. It must make some assumption about how an investor's preference changes with increasing wealth. a. Only statements i. and ii. are correct b. Only statements i. and iii. are correct c. Only statements ii. and iii. are correct d. All three statements are correct 7. You are trying to decide whether or not to buy shares of Netflix, Inc. (NFLX). Based on your quantitative analysis, the expected return on NFLX common stock is 5.65% and its beta is 0.72. If the expected return on the market portfolio is 7.02% and the risk-free rate is 1.52%, based on the CAPM, which of the following statements is correct? a. NFLX stock's alpha is -0.17% b. NFLX stock's alpha is 0.17% c. NFLX stock is underpriced d. NFLX stock is fairly priced 8. If the standard CAPM holds, a security with a high variance of return and a beta of zero should be expected to earn a. a zero rate of return. b. the market rate of return. c. the risk-free rate of return. d. all of the above are correct. 9. In comparing the CAPM to the APT, which of the following is an accurate statement? a. The CAPM places less emphasis on market risk b. The CAPM recognizes multiple unsystematic risk factors The CAPM recognizes only one systematic risk factor d. The CAPM recognizes multiple systematic risk factors C. 10. Which of the following is NOT correct? a. The standard CAPM assumes that there are no transaction costs. b. The standard CAPM assumes that individuals are price-takers. The standard CAPM assumes that investors make decisions solely in terms of the expected returns on their portfolios. d. The standard CAPM assumes that all assets are tradeable. C. 3