Test Bank for Intermediate Financial Management 12th Edition Brigham Daves | Beta (Finance) | Capital Asset Pricing Model

Please download to get full document.

View again

of 21
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Information Report
Category:

School Work

Published:

Views: 379 | Pages: 21

Extension: PDF | Download: 3

Share
Related documents
Description
Test Bank for Intermediate Financial Management 12th Edition Brigham Daves intermediate financial management 12th edition pdf intermediate financial management 12th edition pdf free intermediate financial management 12th edition solutions intermediate financial management 12th edition test bank intermediate financial management 11th edition intermediate financial management pdf intermediate financial management 12th edition download intermediate financial management 12th edition brigham
Transcript
   Page 1 TEST BANK    for Intermediate Financial Management 12th Edition Brigham Daves. Instant Download: http://testbankarea.com/download/test-bank-intermediate-financial-management-12th-edition-brigham-daves/  Solutions manual for Intermediate Financial Management 12th Edition by Eugene F. Brigham, Phillip R. Daves: http://testbankarea.com/download/solutions-manual-intermediate-financial-management-12th-edition-brigham-daves/ CHAPTER 3  —  RISK AND RETURN: PART II     2. If you plotted the returns of Selleck & Company against those of the market and found that the slope of your line was negative, the CAPM would indicate that the required rate of return on Selleck's stock should be less than the risk-free rate for a well-diversified investor, assuming that the observed relationship is expected to continue in the future.   a. True    b. False    NSWER: True    POINTS: 1    DIFFICULTY: Difficulty: Easy    LEARNING OBJECTIVES: INTE.GENE.16.12 - LO: 3-4    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA   TOPICS: SML    KEYWORDS: Bloom’s:  Knowledge   3. If the returns of two firms are negatively correlated, then one of them must have a negative beta.   a. True    b. False    NSWER: True    POINTS: 1   1. The slope of the SML is determined by the value of beta.   a. True    b. False    NSWER: False    POINTS: 1    DIFFICULTY: Difficulty: Easy    LEARNING OBJECTIVES: INTE.GENE.16.12 - LO: 3-4    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA   TOPICS: SML    KEYWORDS: Bloom’s:  Knowledge     Page 2  DIFFICULTY: Difficulty: Easy    LEARNING OBJECTIVES: INTE.GENE.16.13 - LO: 3-5    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA   TOPICS: Beta coefficients    KEYWORDS: Bloom’s:  Knowledge   4. A stock with a beta equal to − 1.0 has zero systematic (or market) risk.   a. True    b. False    NSWER: False    POINTS: 1    DIFFICULTY: Difficulty: Easy    LEARNING OBJECTIVES: INTE.GENE.16.13 - LO: 3-5    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA   TOPICS: Beta coefficients    KEYWORDS: Bloom’s:  Knowledge   5. It is possible for a firm to have a positive beta, even if the correlation between its returns and those of another firm are negative.   a. True    b. False    NSWER: True    POINTS: 1    DIFFICULTY: Difficulty: Easy    LEARNING OBJECTIVES: INTE.GENE.16.13 - LO: 3-5    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA   TOPICS: Beta coefficients    KEYWORDS: Bloom’s:  Knowledge   6. In portfolio analysis, we often use ex post (historical) returns and standard deviations, despite the fact that we are interested in ex ante (future) data.   a. True    b. False    NSWER: True    POINTS: 1    DIFFICULTY: Difficulty: Easy    LEARNING OBJECTIVES: INTE.GENE.16.13 - LO: 3-5    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA     Page 3 TOPICS: Portfolio risk     KEYWORDS: Bloom’s:  Knowledge   7. If investors are risk averse and hold only one stock, we can conclude that the required rate of return on a stock whose standard deviation is 0.21 will be greater than the required return on a stock whose standard deviation is 0.10. However, if stocks are held in portfolios, it is possible that the required return could be higher on the low standard deviation stock.   a. True    b. False    NSWER: True    POINTS: 1    DIFFICULTY: Difficulty: Moderate    LEARNING OBJECTIVES: INTE.GENE.16.14 - LO: 3-2    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA   TOPICS: Risk aversion    KEYWORDS: Bloom’s:  Comprehension   8. The CAPM is a multi-period model which takes account of differences in securities' maturities, and it can be used to determine the required rate of return for any given level of systematic risk.   a. True    b. False    NSWER: False    POINTS: 1    DIFFICULTY: Difficulty: Moderate    LEARNING OBJECTIVES: INTE.GENE.16.15 - LO: 3-3    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA   TOPICS: CAPM    KEYWORDS: Bloom’s:  Comprehension   9. The SML relates required returns to firms' systematic (or market) risk. The slope and intercept of this line can be influenced by managerial actions.   a. True    b. False    NSWER: False    RATIONALE: Managers can influence the firm's beta coefficient by changing such things as the capital structure (more debt will increase beta) and changing the type of assets held by the firm (riskier assets will tend to increase beta). However, managers cannot control the risk-free rate or the return on the market.    POINTS: 1    DIFFICULTY: Difficulty: Moderate    LEARNING OBJECTIVES: INTE.GENE.16.12 - LO: 3-4    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA     Page 4 TOPICS: SML    KEYWORDS: Bloom’s:  Comprehension   10. The Y-axis intercept of the SML indicates the return on an individual asset when the realized return on an average (b = 1) stock is zero.   a. True    b. False    NSWER: False    POINTS: 1    DIFFICULTY: Difficulty: Moderate    LEARNING OBJECTIVES: INTE.GENE.16.12 - LO: 3-4    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA   TOPICS: SML    KEYWORDS: Bloom’s:  Comprehension   11. We will almost always find that the beta of a diversified portfolio is less stable over time than the beta of a single security.   a. True    b. False    NSWER: False    POINTS: 1    DIFFICULTY: Difficulty: Moderate    LEARNING OBJECTIVES: INTE.GENE.16.13 - LO: 3-5    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA   TOPICS: Portfolio beta    KEYWORDS: Bloom’s:  Comprehension   12. Arbitrage pricing theory is based on the premise that more than one factor affects stock returns, and the factors are specified to be (1) market returns, (2) dividend yields, and (3) changes in inflation.   a. True    b. False    NSWER: False    POINTS: 1    DIFFICULTY: Difficulty: Moderate    LEARNING OBJECTIVES: INTE.GENE.16.16 - LO: 3-7    NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking   STATE STANDARDS: United States - AK - DISC: Risk and return    LOCAL STANDARDS: United States - OH - Default City - TBA   TOPICS: Arbitrage pricing theory    KEYWORDS: Bloom’s:  Comprehension   13. You have the following data on three stocks:
Recommended
View more...
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks