With regard convertible debt:

a. Convertible debt usually converts to preferred stock.

b. Convertible debt will usually have a lower value than debt that is not convertible.

c. Convertible debt is regular debt plus a forward contract.

d. Convertible debt is debt that converts for a given number of share for a given time period.

e. Convertible debt is a hybrid security that converts to long-term debt plus preferred.

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Which of the following statements is correct?

a. Fisher Black is credited for discovering the variance formula for a portfolio.

b. The CAPM is very accurate and should be used for stock trading.

c. The CAPM can be used to estimate the required rate of return for finding the price of a stock.

d. Primarily the risk that the CAPM prices, is the total risk of the asset.

e. When we graph the CAPM, the slope of the line is beta.

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Which of the following statements is false?

a. One key result of applying the Capital Asset Pricing Model is that the risk and return of an individual security should be analyzed by how that security affects the risk and return of the portfolio in which it is held.

b. According to the Capital Asset Pricing Model, investors are primarily concerned with portfolio risk, not the isolated risks of individual stocks. Thus, the relevant risk is an individual stocks contribution to the overall riskiness of the portfolio.

c. Betas can be estimated by running a regression between the market returns and the security returns.

d. Betas are constant and never change.

e. Any change in beta is likely to affect the required rate of return on a security which implies that a change in beta will likely have an impact on the security's price.