The IRR decision rule
a) is always equivalent to the NPV decision rule
b) is very similar to the payback period decision rule
c) is equivalent most of the times to the NPV decision rule, but may disagree with it in some situations
d) almost never agrees with the NPV decision rule
e) none of the above
Securities that lie above the Security Market Line
a) are overvalued and should be sold short
b) are overvalued and should be bought
c) are undervalued and should be sold short
d) are undervalued and should be bought
e) none of the above
If the risk-free rate goes up
a) stock prices and bond prices will go up
b) stock prices and bond prices will go down
c) stock prices will go up and bond prices will go down
d) stock prices will go down and bond prices will go up
e) none of the above
An asset with a negative beta
a) provides an expected return equal to the risk-free rate of return
a) provides an expected return equal to zero percent
c) provides an expected return less than the risk-free rate of return
c) decreases with the covariance of returns
d) both a) and b)
e) none of the above