Corporate finance

The ratio of the standard deviation of a distribution to the mean of that distribution is referred to as ____

• a probability distribution

• the expected return

• the standard deviation

• coefficient of variation

 The expected return on a risky asset depends on that asset's total risk:

• True

• False

What happens to the standard deviation of return for a portfolio if we increase the number of securities in the portfolio?

• Decrease

• Increase

A stock has an expected return of 14.0%, its beta is 1.12, and the risk-free rate is 7.0%. What must the expected return on the market be?

• 13,25%

• 14,89%

• 10,57%

• 14,75%

A stock has an expected return of 13.5 percent, its beta is 1.40, and the expected return on the market is 11.5 percent. What must the risk-free rate be? 

• 14,35%

• 15,55%

• 12,45%

• 14,75%

Suppose the risk-free rate is 8%. The expected return on the market is 16%. If a particular stock has a beta of 0.7, what is its expected return based on the CAPM? If another stock has an expected return of 24%, what must its beta be?

• 3

• 4

• 2

• 7

The Counting House, Inc., purchased 5-year property class equipment for $60,000. It uses the MACRS method of depreciation. What is tax depreciation for the second year of the asset's life?

• $19,200

• $12,000

• $27,000

• $24.50

 The weighted average of possible returns, with the weights being the probabilities of occurrence is referred to as ____

• a probability distribution

• the expected return

• the standard deviation

• coefficient of variation

A statistical measure of the variability of a distribution around its mean is referred to as ____

• a probability distribution

• the expected return

• the standard deviation

• coefficient of variation

 Investments A and B both offer an expected rate of return of 12%. If the standard deviation of A is 20% and that of B is 30%, then investors would:

• Prefer A over B

• Prefer a portfolio of A and B

• Cannot answer without knowing investor's risk preferences

• Prefer B over A