100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
Previously searched by you
Solution Manual for Fundamentals of Corporate Finance, 11th Edition by Richard Brealey, Stewart Myers, Alan Marcus/ Corporate Finance Test Bank/ Latest Update Questions with Correct Verified Answers/$16.49
Add to cart
Solution Manual for Fundamentals of Corporate Finance, 11th Edition by Richard Brealey, Stewart Myers, Alan Marcus/ Corporate Finance Test Bank/ Latest Update Questions with Correct Verified Answers/
Solution Manual for Fundamentals of Corporate Finance,
11th Edition by Richard Brealey, Stewart Myers, Alan
Marcus/ Corporate Finance Test Bank/ Latest Update 2024
-2025 Questions with Correct Verified Answers/
Solution Manual for Fundamentals of Corporate Finance,
11th Edition by Richard Brealey, Stewart Myers, Alan
Marcus/ Corporate Finance Test Bank/ Latest Update 2024
-2025 Questions with Correct Verified Answers/
What is the expected return for a security if the risk-free rate is 5%, the expected return
on the market is 9%, and the security's beta is 1.5?
6.5%
11%
13.5%
4% - Correct Answer - 11%
T/F: The expected return of a portfolio is a combination of the weights of each asset in a
portfolio. - Correct Answer - False
T/F: Portfolio weights can be defined as the dollars invested in each asset - Correct
Answer - False
T/F: Historical return data indicates that as the number of securities in a portfolio
increases, the standard deviation of returns for the portfolio increases. - Correct Answer
- False
Which of the following types of risk is not reduced by diversification?
Unique risk
Asset-specific risk
Unsystematic risk
Systematic, or market risk - Correct Answer - Systematic, or market risk
pg. 1
,To determine the appropriate required return for an investment, we can use
___________________
the risk-free rate
the lowest going rate
the Security Market Line
the average return on the market - Correct Answer - the Security Market Line
Systematic risk will ____ when securities are added to a portfolio
decrease
not change
increase
be eliminated - Correct Answer - not change
What is the intercept of the security market line (SML)
Beta
The market rate of return
The market-risk premium
The risk-free rate - Correct Answer - The risk-free rate
The true risk of any investment comes from _____________
anticipated events
surprises
expected return
errors - Correct Answer - surprises
The standard deviation of a portfolio will tend to increase when ____. - Correct Answer -
The portfolio concentration in a single cyclical industry increase.
pg. 2
,Systematic risk is measured by ____. - Correct Answer - Beta
Which one of the following would indicate a portfolio is being effectively diversified? -
Correct Answer - A decrease in the portfolio standard deviation.
The majority of the benefits from a portfolio diversification can generally be achieved
with just ____ diverse securities. - Correct Answer - 30
Which one of the following measures is relevant to the systematic risk principle? -
Correct Answer - Beta
A security that is fairly priced will have a return ____ the Security Market Line. - Correct
Answer - On
The intercept point of the security market line is the rate of return which corresponds to
_____. - Correct Answer - the risk-free rate of return.
What does the security market line depict?
-It depicts the relationship between systematic risk and unsystematic risk.
-It depicts the relationship between the return on the S&P 500 and an individual
security's return.
-It depicts the relationship between expected return and the standard deviation of
returns.
-It is a graphical depiction of the capital asset pricing model. - Correct Answer - It is a
graphical depiction of the capital asset pricing model
____________ risk is the only risk important to the well diversified investor.
-It is a fee charged to investors by the SEC that allows them to invest in risky securities.
-It is the return on risk-free securities.
-It is a numerical estimate of beta.
-It is additional compensation for taking risk, over and above the risk-free rate. - Correct
Answer - It is additional compensation for taking risk, over and above the risk-free rate.
If an asset has a reward-to-risk ratio of 6.0%, that means it has a __________ of 6.0%
per unit of ______
When a dollar in the future is discounted to the present it is worth less because of the
time value of money, but when a news item is discounted, it means that the market
reversed its position based on the news
doesn't pay attention to news items
already knew about most of the news item - Correct Answer - already knew about most
of the news item
Which of the following are examples of systematic risk?
Regulatory changes in tax rates
pg. 4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller ASSIGNMENT7. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $16.49. You're not tied to anything after your purchase.
