Which of the following would be true for a stock with a negative beta one? 6. dding it to the market portfolio would not reduce the risk of the portfolio B. I ts expected return would be less than the risk-free rate of return C. Its standard deviation would be negative D. The correlation coefficient between it and Treasury Bills would be positive 7. For capital budgeting purposes, financial analysts should always focus on A. Incremental cash flows B. Levels of working capital C. Nominal cash flows D. Real cash flows 8, McDonald's has an expected return of 12% and a standard deviation of 20%. The sk-free rate for both borrowing and lending is 3%. You can use McDonald's and the risk-free asset to form a portfolio. What will be the expected return of your portfolio if you construct it so that its standard deviation is 30%? A. 8.5% B. 16.5% C. 18.5% D. None of the above flow of S100 today and a cash outflow of $120 a 9. If you expect to experience a cash in year from now, the IRR is . -20% B, 2090 C. $20 D. It depends on the cost of capital 10. Based on what we learned in class, which of the following statements will not be true for an investor if he/she is risk-averse? A. Their expected return for a stock is determined entirely by its market risk with no concern for its unique risk B. They prefer less variance and more expected return in their portfolios C. They will purchase Treasury bonds rather than junk bonds D. They require a higher expected return as compensation for taking on additional risk