A (1) Suppose the equity premium is positive and the CAPM holds. What is the expected rate of return for a stock that has a beta of 1, if the expected return on the market is 20%? 15% B. Less than 15% More than 15% 20% C. A. Anni (2) Apple stock has a market beta of 2 and Facebook stock has a market beta of 1. The risk-free rate is 5% and the market return is 10%. Which of the following statements is incorrect: Apple stock has more firm-specific risk than Facebook stock Apple stock has a higher expected rate of return than the market C. Apple stock has more systematic risk than Facebook stock Apple stock has higher expected returns than Facebook because it is riskier (3) Which of the following would provide evidence against the semistrong form of the efficient market theory? A. Your portfolio return is 10%, while the market return is 16% in the same year Junk bonds have a lower return than investment grade bonds in the same year You make abnormal profits using publicly available earnings information High beta stocks have higher average returns than low beta stocks (4) If the efficient market hypothesis is valid, which of the following statement is correct? A. High-beta stocks are consistently underpriced B. Negative alphas on stocks will quickly disappear C. Low-beta stocks are consistently overpriced D. Negative-alpha stocks consistently yield low returns for arbitrageurs