Answer the following multiple choice questions very carefully (they are hard)

Q14: Stock AAA has a systematic risk of B-1.2 and a total risk of o=30% while stock BBB has a systematic risk of B-1.5 and a total risk of o-24%. According to the Capital Asset Pricing Model, which stock should have a higher required return and why? A) AAA because it has a higher systematic risk. B) BBB because it has a higher total risk. C) Same returns because 1.5/1.2-30/24 D) One needs to know the risk-free interest rate to answer this question. E) Even if the risk-free interest rate were given, it is still not possible to answer this question. Q15: In case of negative externalities, why does introducing a sales tax and distributing the tax revenue to low-income households may lead to a higher level of total negative externality? A) Because to reduce negative externality, the government needs to introduce a per-unit tax on producers, not on consumers. B) Because of the high transaction costs that are required to collect tax and distribute it C) Because such policy only works in case of perfectly competitive markets D) Because the consumers will switch to different products thus, avoiding paying this sales tax, which will make the tax revenue substantially lower than expected E) Because low-income households have higher marginal propensity to consume Q16: Which of the following bonds are affected by the change in the interest rates the most: A) Bonds with long maturity time and high coupon rate B) Bonds with short maturity time and high coupon rate C) Bonds with long maturity time and low coupon rate D) Bonds with short maturity time and low coupon rate E) Floating-rate bonds