Question

If the value of beta for the firm VIC is greater than one, then

Select one:

The expected returns for VIC are lower than the market returns

The expected returns for VIC are greater than the market returns

The expected returns for VIC are equal to the market returns

Answer #1

Beta of VIC firm is more than 1. wheras Market beta is always 1.

Expected return of firm as per CAPM = risk free rate +(Beta*(market return - risk free rate))

take assumed figures: RF = 2%, Market return = 6% Beta of VIC = 1.2

Then expected return of VIC = 2%+(1.2*(6%-2%))

=6.8%

As we can see that Market return is 6% while Expected return of VIC is more than market return 6%

So correct statement is b, The expected returns for VIC are greater than the market returns

15.For any given output level, a firm's long-run costs Select
one:
a. are always greater than or equal to its short-run costs.
b. are usually greater than or equal to its short-run costs
except in the case of diminishing returns to scale.
c. are always less than or equal to its short-run costs.
d. are usually less than or equal to its short-run costs except
in the case of diminishing returns to scale.

28. For a seller with market power, its marginal revenue is:
Select one:
a. greater than price
b. equal to price
c. smaller than marginal cost
d. smaller than price

Geometric returns are always greater than arithmetic average
returns. Select one: True False

Which of the following statements is CORRECT?
Select one: a. The beta of a portfolio of stocks is always
smaller than the betas of any of the individual stocks.
b. The beta of a portfolio of stocks is always larger than the
betas of any of the individual stocks.
c. It is theoretically possible for a stock to have a beta of
1.0. If a stock did have a beta of 1.0, then, at least in theory,
its required rate...

Personal income
Select one:
A. is always greater than national income. B. is always less
than national income. C. will always equal national income. D. may
be greater than or less than national income.

A discount bond:
Select one:
a. Has a coupon rate which is greater than the yield to
maturity.
b. Has a par value which is less than the market value.
c. Has a coupon rate which is less than the market rate of
interest.
d. Is selling for more than face value.
e. Is the name given to a bond that has been called prior to
maturity.

Which of the following statements is true?
Select one:
A. Beta identifies the appropriate level of risk for which an
investor should be compensated.
B. Unsystematic risk is not diversifiable, so there is no reward
for taking on such risk.
C. Stocks with same betas will always earn different
returns.
D. The market risk premium is calculated by multiplying beta by
the difference between the expected return on the market and the
risk-free rate of return.

Which of the following statements about the beta coefficient is
false?
A
A stock’s beta coefficient measures its volatility relative to
the market portfolio.
B
A stock’s beta coefficient can be estimated by plotting the
stock’s returns versus the market portfolio’s returns.
C
A stock’s reported beta coefficient is based on forecasted
future volatility.
D
A stock with a beta coefficient greater than 1.0 is said to be
riskier than the market portfolio.
E
Using the capital asset pricing model,...

2. Which of the following statements concerning beta is
correct?
a. A stock with a beta of 0 is expected to provide a rate of
return equal to the market portfolio
b. A stock with a beta equal to 1 has no risk
c. Stocks with negative betas have the least amount of risk
FALSE
d. A stock with a beta greater than 1 is expected to be more
volatile than the market portfolio

1(a). When NPV less than 0, then: Select one:
a. IRR=0
b. IRR greater than required return
c. IRR less than 0
d. IRR less than 0
e. IRR less than required return
1(b). When IRR greater than required return, then: Select
one:
a. NPV greater than 0
b. NPV less than required return
c. NPV greater than required return
d. NPV=0
e. NPV less than 0

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