If the market is in equilibrium and the CAPM holds then:

Investors are indifferent to buying stocks with a variety of betas.

High beta stocks are less desirable than are low beta stocks.

Standard deviation is the relevant measure of market risk.

Investors require higher returns for higher-beta stocks.

More than one of the answers are correct.

Which of the following statements is correct?

If you are standing at the horizon point, then the growth rate from that point on is non-constant.

When calculating stock value, we must account for all cash flows including the dividend we received at t = 0.

When calculating stock value, we must account for all cash flows except for those beyond the horizon point.

You can only use the Gordon constant growth model when the growth rate is constant and when rs < g.

The g in the Gordon constant growth model represents the growth rate both in dividends and in expected stock price.

Which of the following statements is most correct?

The market turmoil in 2007 2008 was caused partly by banks lending to underqualified borrowers.

The mortgages held by investment banks during the financial crisis were considered to be toxic assets.

Contagion occurs when the failure of one financial institution leads to the failure of another.

The debt-to-GDP ratio is not a good measure of its debt burden. The total amount of debt that a country has is a more meaningful measure.

More than one of the answers is correct.