9. Which of the following statements about risk is FALSE? Risk is one of the determinants of required return. h. Risk version is a characteristic of the rational Investor Risk requires the possibility of more than one outcome. & Risk requires at least one possible outcome less favorable than the expected value. All of the above are true 10. Feed financing charges include: Bond interest expense and preferred stock dividends. Common stock dividends and bond interest expense Common stock dividends and preferred stock dividends 11. Any action by a manager that increased risk without increasing expected return should not affect the stock price increase the stock price decrease the stock price There is not much information to determine 12. Assume three possible states of the economy and their probabies for next year Expansion 30 Normal 50% Fill in answer b c None of the above True b. . Recession Portfolio contains 100 stocks la portfolio betala 12 There we know with certainty that each of the stocks held in the portfolio has a higher beta coefident than the male False 24 Sunce an investor can diversity assets, the only relevant risk priced by the market te company specific risk systematic risk 15. Donald is comparing several investments that have diferent expected returns. He always chooses the asset with the highest return. According to modern portfolio theory (CAPM). Donald's investment criterion is considered that of a rational Investor False 16. Kaye's portfolio contains one security. Connie's portfolio contains 26 securities which at the following statements is true? Kaye's portfolio has more non-systematic risk than Connie's portfolio b. Kaye's portfolio has less market risk than Connie's. c. Kaye's portfolio and Connie's portfolio have equal amounts of company-specific risk d. Cannot be determined from the information given 17. The beta of a portfolio of stocks is always greater than the beta of any individual stock held inside the portfolio a. True b. False 18. Over time, returns for internationally diversified portfolios tend to be domestically diversified portfolios because of a. inferior; increased diversification b. inferior, increased risk. c superior; increased diversification. d. superior, stock picking abilities of portfolio managers. to