7. This type of risk is avoidable through proper cdi a) Portfolio risk b) Systematic risk c) Unsystematic risk d) Total risk 8. According to the caital asset priding model, a security's expected return is equal to the risk free rate plus asset pricing model, a security's expected return is equal to the risk free rate plus a risk premium" which is a) Equai to the security's beta b) Based on the total risk of the security c) Based on the systematic risk of the security d) Based on the unsystematic risk of the security 9. A statistical measure of the variablity of a distribution around its mean is referred to as a) A probability distribution b) The expected return c) The standard deviation d) Coefficient of variation 10. What is the Beta of a stock whose return increases and decreases in exact and perfect proportion with the broad market return: a) 0.0 b) 1.0 c) 100.0 d) 2.0 Weighted Average Cost of Capital (WACC) signals a firm's a) Earnings potential b) Expected growth rate c) Hurdle rate for new investments d) Expected return 11. 12. When calculating a firm's WACC, the debt and equity amounts used to calculate weights must be based on: a) GAAP book values b) Market values c) Equity market value and debt book value d) Debt market value and equity book value 13. The cost of equity is typically: a) Higher than the cost of debt b) Equal to the cost of debt c) Less than the cost of debt d) Equal to the return on equity In a typical market, the average risk premium (market return less the risk free rate) is between a) b) c) d) 1%-2% 3%-4% 496.7% 9%-11% 15. In calculating the costs of the individual components of a firm's financing, the corporate tax rate is important to which of the following component cost formulas: a) Common Stock b) Debt c) Preferred stock d) None of the above