Safety stock increases when: A) probability of a stock-out increases. B) average demand increases. C) delivery speed increases. D) demand fluctuations decrease.

Assume that the risk-free rate remains constant, but the market risk premium declines. Which of the following is most likely to occur?   a. The required return on a stock with beta = 1.0 will not change.     b. The required return on a stock with beta > 1.0 will increase.     c. The return on "the market" will increase.     d. The return on "the market" will remain constant.     e. The required return on a stock with a positive beta < 1.0 will decline.

Higher interest rates imply higher required rates of return, which is generally a negative for stock prices a. True b. False

1.Which of the following is assumed by the Black-Scholes-Merton model? A.The return from the stock in a short period of time is lognormal B.The stock price at a future time is lognormal C.The stock price at a future time is normal D.None of the above