The return on _________________ is the best measure of the risk-free rate of interest.

Question 4 options:

1) stocks

2) options

3) U.S Treasury Bills/Bonds

4) real estate Save

Question 5: Other things held constant, an increase in a bonds expected return (yield to maturity) will cause:

Question 5 options:

1) the price of the bond to decrease.

2) the price of the bond to remain unchanged.

3) the price of the bond to increase.

4) the price of the bond to increase or decrease based on the bonds issue date.

Question 6 Consistent with the Capital Asset Pricing Model (CAPM), the best measure of market risk is:

Question 6 options: 1) standard deviation (total risk).

2) beta (systematic risk).

3) variance (total risk).

4) coefficient of variation (risk per unit of return).

Question 7 Which of the following statements concerning the constant growth model is TRUE:

Question 7 options:

1) The stock price equals the value of the next dividend.

2) Dividends are assumed to grow at a constant rate.

3) The model does not consider risk.

4) There is no adjustment for dividend growth.