Q1. Choose the correct answer: Bet in CAPM model means 1 o 2 If a company has returns of 17% and a WACC of 10%, then e 3 If X company's debt was $240 billion, its market capm (or equity value) is $60 billion. Then: a c 4 The formula [risk free rate + beta (market return- risk-free rate)]. is a Mere of non-systematic risk of security portfolio in comparison to the markets a whole b a mesure of the volatility of security or a portfolio in comparison to the market as a whole measure of the systematic risk or a security or a portfolio in comparison to international market d None of the above The company is losing 7 cents for every dollar spent 72) b There is no debt. The company is profiting 7cents for every dollar spent (795) d The equity cost is 79% X WACC (80%20%2 b X is expected to lose 20% X finances operations with 20% equity and 80% debt. d X finances operations with 75% equity and 25% debu Weighted Average cost of capital b Capital asset pricing model c Market volatility d Risk premium a 3.49% b 2.5% c 7.48% d 1.99% 11 it will have a beta smaller than one. b it will have a beta greater than one. it will have equity cost greater then risk free investments d The WACC will be greater than one a AS C b A+CCB c A+B> C A+B