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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/R307,60
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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/
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Course
Corporate Finance
Institution
Corporate Finance
Book
Corporate Finance
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/
Test Bank for Solution Manual Fundamentals of Corporate Finance 10th CANADIAN Edition By Ross (All Chapters Covered) Updated 2024 / Questions with Correct Verified Answers
Course Course Corporate Finance, 13th Edition
Corporate Finance Stephen Ross 12th Edition- Test Bank ( CHApter 3& 5)
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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
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