Long-term-government securities maybe preferred over short-term government securities by analysts because which of the following statement is most accurate? A. Shares are also a form of long term investment B. They are a preferred form of investment C. Shares are also a form of long term investment and therefore their returns are similar. D. They are considered more risk free E. None of the options provided. 2.For a stock with a measured(levered) beta of 1.2 estimated its asset beta if the tax rate is 30% and the D/E ratio is 80%, which of the following is correct? A.0.77 B. 0.94 C. 0.83 D.1.5 E.None of the options provided.
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
Long-term-government securities maybe preferred over short-term government securities by analysts because which of the following statement is most accurate?
A. Shares are also a form of long term investment
B. They are a preferred form of investment
C. Shares are also a form of long term investment and therefore their returns are similar.
D. They are considered more risk free
E. None of the options provided.
2.For a stock with a measured(levered) beta of 1.2 estimated its asset beta if the tax rate is 30% and the D/E ratio is 80%, which of the following is correct?
A.0.77 B. 0.94 C. 0.83 D.1.5 E.None of the options provided.
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