Five-year Treasury bonds are yielding 5.2% and a five-year corporate bond is yielding 7.1%. If the corporate bonds yield includes a 0.3% liquidity premium and a 0.5% maturity risk premium, what is its default risk premium?

Question 9 options:

A)

1.6%

B)

1.1%

C)

1.4%

D)

1.9%

E)

2.1%

You have the data on three stocks as shown in the picture. If you are risk averse (a risk minimizer), you would choose Stock ____ if it is to be held stand-alone, and Stock ____ if it is to be held within a well-diversified portfolio.

Question 11 options:

A)

B; A.

B)

B; B.

C)

C; A.

D)

A; C.

E)

A; B.

Stock Beta 0.55 Standard Deviation 14% 10% 8% 0.61 1.29