The Security Market Line has ________. A) a positive slope B) a negative slope C) no slope D) a beta of 1.0 ANSWER Answer: A
Date: September 19th, 2020
In the basic EOQ model, the optimal inventory level is the point at which A) total revenue is maximized. B) carrying costs are minimized. C) ordering costs are minimized. D) total cost is minimized. ANSWER D
Date: September 19th, 2020
Given an expected market return of 12.0%, a beta of 0.75 for Benson Industries, and a risk-free rate of 4.0%, what is the expected return for Benson Industries? A) 13.0% B) 10.0% C) 9.0% D) 4.0% ANSWER Answer: B Explanation: B) The equation for the SML is E(ri) = rf + (rf + […]
Date: September 19th, 2020
Beta is ________. A) a measure of systematic risk B) a measure of nondiversifiable risk C) the appropriate measure of risk for a well-diversified portfolio D) All of the above ANSWER Answer: D
Date: September 19th, 2020
John has a portfolio consisting of equal proportions of 5 securities. Susan also has a portfolio of the same five securities but the weights of each security are not equal. Which of the statements below MUST be true? A) Because Susan has an unequal distribution of securities, her portfolio beta must be less than John’s. […]
Date: September 19th, 2020
Which of the following assumptions about the Security Market Line is NOT true? A) There is a basic reward for waiting: the risk-free rate. B) The greater the risk, the greater the expected return. C) There is an inconsistent trade-off between risk and reward at all levels of risk. D) All of the above statements […]
Date: September 19th, 2020
The beta of a portfolio is the weighted average of the betas of all of the assets in the portfolio. Indicate whether the statement is true or false. ANSWER Answer: TRUE
Date: September 19th, 2020
Analysts state that the required return from Plummet Soft Drinks stock is 25%, and the returns from Treasury bills and the market portfolio are 4% and 20%, respectively. What is Plummet’s beta? A) 0.79 B) 1.00 C) 0.05 D) 1.31 E) 1.13 ANSWER D
Date: September 19th, 2020
If the variables in the EOQ inventory model are defined as: S = total units demanded during the planning period, O = ordering costs per order, C = carrying costs per unit and Q = inventory order size in units, then the average level of inventory which a company should have during the planning period […]
Date: September 19th, 2020
The measure of systematic risk is called ________. A) correlation B) covariance C) variance D) beta ANSWER Answer: D
Date: September 19th, 2020
