Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The money market is the market where : The issuer sells the assets. The investors trade assets among themselves. The investor purchases old government bonds

image text in transcribed
image text in transcribed
image text in transcribed
The money market is the market where : The issuer sells the assets. The investors trade assets among themselves. The investor purchases old government bonds for his (her) retirement. The assets have a maturity of one year or less. Question 49 (1 point) The betas of two companies A and B are respectively 1 and 0.7 . The minimum required return based on CAPM for the two companies A and B are respectively 14% and 11.3%. The risk-free rate is therefore: 4% 5% 6% 7% None of the above. The total risk of a portfolio can be decomposed in two parts: Systematic (undiversifiable) risk and specific (diversifiable) risk. The effect of diversification is: Reduction of systematic and specific risks. Reduction of systematic risk and no impact on specific risk. No impact on systematic risk and reduction of specific risk. No impact on any kind of risk. Question 55 (1 point) Capital Asset Pricing Model (CAPM) estimates: The maximum return that investor can realize on an asset or a portfolio. The minimum required return on an asset or a portfolio as a function of its total risk. The minimum required return on an asset or a portfolio as a function of its systematic risk. The average required return on an asset or a portfolio. None of the above. The betas of the company A is 1.3 . The minimum required return of the company, based on CAPM, is 16%. If the risk-free rate is at 6%, what is the expected market return? 12.24%. 12.90% 13.69%. 12.56%. 13.98%. Question 51 (1 point) The betas of the two companies A and B are respectively 1 and 0.6 . The minimum required return of the company A is 14%. If the risk-free rate is at 6%, what is the minimum required return of the company B ? 10.8% 10.2% 12.1% 11.2%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How To Audit Document Control System Based On ISO 9001 2015

Authors: Folarin Omojoye

1st Edition

B09892NF88, 979-8525615175

More Books

Students also viewed these Accounting questions

Question

11. Are your speaking notes helpful and effective?

Answered: 1 week ago

Question

The Goals of Informative Speaking Topics for Informative

Answered: 1 week ago