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8/ Analysis of returns using the SML would indicate that: as betas increase, the expected return decreases. the required return for all securities can be

8/ Analysis of returns using the SML would indicate that:

  • as betas increase, the expected return decreases.

  • the required return for all securities can be expressed as the risk free rate minus a premium for risk.

  • if beta is positive a negative correlation exists between market risk and the risk free rate.

  • if the beta is 2.0, twice the market risk premium must be earned

    10/ The tool used to evaluate the present value of future cash flows is:

  • beta.

  • cost of capital.

  • growth rate

  • NOI.

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