1. Stocks returns can be explained by the stocks ____and the stocks _____.

1. Market risk; unique risk
2. Beta; systematic risk
3. Unique risk; firm-specific risk
4. Aggressive risk; defensive risk

2. If a project has a net present value of zero, then:

1. The present value of the cash inflows equals the initial cost of the project.
2. The project produces a rate of return that just equals the rate required to accept the project
3. The project is expected to produce only the minimally required cash inflows
4. Any delay in receiving the project cash inflows will cause the project to have a negative net present value.

1. I, II, III and IV
2. II and IV
3. I, II and IV only
4. II, III and IV only