Multiple Choice: The beta of a security provides an estimate of the

1. Characteristic line for the security 2. The market risk premium 3. Slope of the security market line 4. Total risk of the individual security 5. Slope of the capital market line

Multiple Choice: In scenario analysis, the expected case is 1. The situation where a project obtains its financial break-even point 2. A firms most optimistic outlook that is likely to occur 3. Based on a firms historical average sales and costs 4. Determined by a firms current level of sales and costs 5. A firms best guess of a future outcome

Multiple Choice: Which one of the following is an example of systematic risk? 1. An unpopular president of a firm suddenly resigns 2. A poorly managed company suddenly goes out of business due to slow sales 3. An efficient company reduces its work force and automates several jobs 4. A well respected chairperson of the Federal Reserve suddenly reigns 5. A key company employee suddenly resigns and accepts employment with a competitor

Multiple Choice: Markets tend to be efficient when 1. Amateurs dominate the market 2. Prices adjust to new information slowly 3. All investors are required to be rational 4. Professional arbitrage exceeds amateur speculation 5. Arbitrage is unlawful