I. Systematic risk is also referred to as

A. market risk or non-diversifiable risk.

B. market risk or diversifiable risk.

C. unique risk or non-diversifiable risk.

D. unique risk or diversifiable risk.

E. None of the options

II. Debt securities are often called fixed-income securities because

A. the government fixes the maximum rate that can be paid on bonds.

B. they are held predominantly by older people who are living on fixed incomes.

C. they pay a fixed amount at maturity.

D. they promise either a fixed stream of income or a stream of income determined by a specific formula.

E. they were the first type of investment offered to the public, which allowed them to "fix" their income at a higher level by investing in bonds.

III. ________ are analysts who use information concerning current and prospective

profitability of a firm to assess the firm's fair market value.

A. Credit analysts

B. Fundamental analysts

C. Systems analysts

D. Technical analysts

E. Specialists

I. The index model has been estimated for stock A and B using the monthly return

data for the period January 2017-December 2019 with the following outcomes:

, 0.0015 0.7727,,

, 0.0139 0.6402,,

The variance of the market portfolio (

) is 0.0212. Assume that you have created

a portfolio by investing 25% in the risk-free asset, 45% in stock A and the balance

in stock B. The beta and the market risk of your portfolio are

A. 0.6423 and 0.0043 respectively.

B. 0.5398 and 0.0062 respectively.

C. 0.8247 and 0.0078 respectively.

D. 1.0234 and 0.6200 respectively.

E. 0.8398 and 0.5342 respectively.

II. The growth in dividends of ABC, Inc. is expected to be 15% per year for the next

three years, followed by a growth rate of 8% per year for two years; after this fiveyear period, the growth in dividends is expected to be 3% per year, indefinitely.

The required rate of return on ABC, Inc. is 13%. Last year's dividends per share

were $1.85. What should the stock sell for today?

A. $8.99

B. $25.21

C. $40.00

D. $27.74

E. None of the options