1.Which of the following is true regarding market risk? (Points : 1

25 May 1.Which of the following is true regarding market risk? (Points : 1

Posted at 17:18h in Essay Writing Services by Past Papers

uestion

1.Which of the following is true regarding market risk? (Points : 1)

It is measured by beta.
It is also called nondiversifiable risk.
It is also called systematic risk.
all of the above

2.If an investor purchases a share of stock for $300, collects a dividend during the year equal to $35 a share, and sells the stock at the end of the year for $289, what is the investor’s return for the year? (Points : 1)

12.11%
8.30%
8.00%
15.33%

3.One reason why we are not concerned with idiosyncratic risk (also called firm-specific risk) is that: (Points : 1)

most risk is not firm-specific, so we can ignore it.
through hedging and insurance, investors may now invest in stocks with almost no risk exposure of any kind.
it is easy and almost costless to diversify one’s portfolio and eliminate idiosyncratic risk.
investing in bonds can offset the idiosyncratic risks of shares of stock.

4.Beta is estimated as the slope of a regression line fit to pairs of periodic returns, (r_x, r_y), where: (Points : 1)

r_x is the return for a market index such as the S&P 500 Index.
r_xis the return for the stock being analyzed—for example, IBM’s return if we are estimating IBM’s beta.
the slope measures the average return for the market portfolio for each percentage change in the value of the security of interest.
r_yis the return for the market index such as the S&P 500 Index.

5.The financing mix reflected in the WACC should: (Points : 1)

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