Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can you please help with the following 10 questions. Question 1(1 point) Saved There is lower risk inherent in a portfolio if there is a

Can you please help with the following 10 questions.

Question 1(1 point)

Saved

There is lower risk inherent in a portfolio if there is a high correlation between the stocks in a portfolio.

Question 1 options:

a) Trueb) False

Question 2(1 point)

According to the Capital Asset Pricing Model, the relevant risk of a stock is that stock's contribution of risk to the risk of a well-diversified portfolio.

Question 2 options:

a) Trueb) False

Question 3(1 point)

For portfolio analysis purposes, ex post returns and standard deviations are commonly used even though a primary interest is in the ex ante data.

Question 3 options:

a) Trueb) False

Question 4(1 point)

Zero coupon bonds pay no interest and are offered at par value. These types of bonds allow investors to reap compensation through capital appreciation.

Question 4 options:

a) Trueb) False

Question 5(1 point)

If a 10-year bond with a 9% annual coupon has a yield to maturity rate of 8%, which statement would be accurate?

Question 5 options:

a)

The bond's current yield is greater than 9%.

b)

The bond's price will be lower in a year than the current price if the yield to maturity remains the same.

c)

The bond's price will be higher in a year than the current price if the yield to maturity remains the same.

d)

The bond is selling below its par value.

Question 6(1 point)

Which of the following occurrences would increase the chances that a firm calls its outstanding callable bonds?

Question 6 options:

a)

The company's bonds are downgraded by Standard and Poor's.

b)

There is a significant increase in interest rates.

c)

There is a sharp decline in market interest rates.

d)

There is a significant deterioration in the firm's financial position.

Question 7(1 point)

If a manager wants to increase the expected rate of return, he or she should increase the firm's risk in relation to the market.

Question 7 options:

a) Trueb) False

Question 8(1 point)

If Stock Z has a beta of 0.8, and Stock W has a beta of 1.6, which would be a correct statement?

Question 8 options:

a)

If the marginal investor becomes more risk averse, the required return on Stock Z will increase by more than the required return on Stock W.

b)

A portfolio of equally weighted Stock Z and W will have a beta lower than 1.2.

c)

If the risk-free rate increases while the market risk premium remains constant, the required return for Stock Z will increase by more than for Stock W.

d)

If the marginal investor becomes more risk averse, the required return on Stock W will increase by more than the required return on Stock Z.

Question 9(1 point)

A company wants to issue new 20-year callable bonds that will be made callable after 5 years at a 5% call premium. How would this affect their required rate of return?

Question 9 options:

a)

The required rate of return would decline due to the call premium.

b)

Because the bond would be a less risky investment for a bondholder, the required rate of return would decline.

c)

There would be no expected change in the required rate of return.

d)

The required rate of return would increase due to increased risk for the bondholder.

Question 10(1 point)

A stock with a beta that equals -1.0 has no market risk.

Question 10 options:

a) Trueb) False

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals of Investments Valuation and Management

Authors: Bradford Jordan, Thomas Miller

7th edition

978-0078096785, 78096782, 978-0077861636, 77861639, 978-0078115660

More Books

Students also viewed these Finance questions

Question

Are summer stipends available?

Answered: 1 week ago

Question

What is a consumption ratio?

Answered: 1 week ago

Question

Describe an activity-based relational database.

Answered: 1 week ago