Question 17 (1 point) You have a portfolio consisting of two stocks only. The correlation coefficient between the two stocks is p. Which of the following scenarios reduces the portfolio risk most? O 1) When p=+1 O 2) When p=0 3) When pu-0.5 O4) When pe-1 Question 18 (1 point) The preferred stock sells for $50 per share and pays annual dividends of $4.5 per share. If the flotation cost is $5 per share, what is the cost of capital for the preferred stock? 1) 8% O2) 9% O 3) 10% 4) 11% Question 19 (1 point) You just purchased the common stock of Charter Oil Corporation for $36 per share. Suppose the stock has a 40% chance of being $32 and 60% chance of being $48 per share one year later. What is the expected rate of return on the stock? 1) 6.67% O2) 11.11% 3) 15.56% O4) 20.94% Question 20 (1 point) EDS Industries Inc. is considering a project that has the following cash flows: CFO--$6,500, CF1 - $2,000, CF2- $3,000, CF3- $3,000, CF4- $1,500. What is the payback period for the project? O 1) 1.0 O2) 2.0 O 3) 2.5 O4) 3.5