Which statement is correct about common and preferred stocks?

Firms can choose to pay common dividends before the due preferred dividends are completely paid.

Preferred dividends are dividends issued by profitable firms that are preferred by most investors.

Preferred dividends are cumulative; common dividends can be skipped and they are not cumulative.

If a firm skips its preferred dividends more than three times, the firm is legally bankrupt.

Which statement is correct?

The CAPM quantifies the relation between risk and return, even for risk-free assets.

The CAPM tells you how to determine the risk-free rate.

The CAPM considers two risk sources.

According to the CAPM, risk premium is lower if the return on the risky asset has a greater tendency to move in sync with the market.

Which statement is correct? Sigma denotes standard deviation.

If sigma_A = -1, sigma_B = -2, then A is riskier.

If sigma_A = -1, sigma_B = -2, then B is riskier.

If sigma_A = 1, sigma_B = 0.5, then A is riskier.

It is possible that sigma_A = sigma_B and the risk premiums are different depending on how they are correlated with the market.

Blue stocks total (annual return) variance is 0.04; Red stocks is 0.01. Which one of the following is definitely correct?

Blue stock is riskier and must offer a higher rate of return

Red stock is safer, hence it is better.

Blue stock certainly has higher total (standalone) risk, but it doesnt mean Blue stock has to offer a higher expected return because Blue stock may have a lower market risk (i.e., systematic risk) than Red stock does.

Blue stock is less risky