A) Which one of the following statements concerning beta is correct?

1.The beta assigned to the overall market is zero.

2. A stock with a beta of 1.2 earns a higher risk premium than a stock with a beta of 1.3.

3. stock with a beta of 0.5 has 50 percent more risk than the overall market.

4. Beta is applied to the T-bill rate when computing the discount rate used for the dividend discount models.

5. The higher the beta, the higher the discount rate used for the dividend discount models.

B) Which one of the following statements is correct?

1. Professional money managers outperformed the Vanguard 500 Index Fund on an annual basis more than half the time for the period 1986-2014.

2. Purchasing and holding a broad-based index fund is a highly recommended means of investing.

3. The number of general equity mutual funds has decreased over the past 20 years due to their underperformance as compared to index funds.

4. The survivorship bias lowers the returns earned by professional money managers as a group.

5. In an efficient market, there is no need for professional money managers.

C) Which one of the following statements concerning the stock market is correct?

1. Leverage was one of the contributing factors of the Crash of 1929.

2. "Black Monday" refers to October 29, 1929.

3. Program trading is cited as the sole cause of the Crash of 1987.

4. Generally speaking, market crashes tend to last longer than market bubbles.

5. It took the market 10 years to recover from the Crash of 1987.