Market risk refers to the tendency of a stock to move with the general stock market. A stock with above-average market risk will tend to be more volatile than an average stock, and it will also have a beta which is greater than 1.0. a. True b. False Historically, stocks have delivered a higher return on average compared to Treasury bills but have experienced less fluctuations in values. a. true b. false If interest rates rise dramatically the value of short term bonds changes more than long term bonds. a) True b) False The bonds of Co. X are $1,000 par and pay an annual rate of 10% coupon interest and the required rate of return (rd) is 6%, if interest rates do not change for the remaining five years until maturity what will happen to the price of the bonds as they approach maturity? A) increase B) decrease C) remain the same An advantage of the corporate form of ownership is _________. (a) no liability (b) unlimited liability (c) limited liability (d) CEO liability The higher an asset's beta, __________. A) the more responsive it is to changing market returns B) the less responsive it is to changing market returns C) the higher the expected return will be in a down market D) the lower the expected return will be in an up market Wealth maximization as the goal of a firm implies enhancing the wealth of _________. A) the auditors B) the creditors C) the federal reserve D) the firm's stockholders