stock with a beta of zero would be expected to have a rate of return equal to a. the risk-free rate b. the market risk premium c. zero d. the market rate of return 2. If an individual stock's beta is higher than 1.0, that stock is: a. riskier than the market. b. always the most attractive to investors. c. less risky than the market.
stock with a beta of zero would be expected to have a rate of return equal to a. the risk-free rate b. the market risk premium c. zero d. the market rate of return 2. If an individual stock's beta is higher than 1.0, that stock is: a. riskier than the market. b. always the most attractive to investors. c. less risky than the market.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1. A stock with a beta of zero would be expected to have a rate of return equal to
a. the risk-free rate
b. the market risk premium
c. zero
d. the market rate of return
2. If an individual stock's beta is higher than 1.0, that stock is:
a. riskier than the market.
b. always the most attractive to investors.
c. less risky than the market.
d. exactly as risky as the market.
3. If Brewer Corporation's bonds are currently yielding 8% in the marketplace, why is the firm's cost of debt lower?
a. Market interest rates have increased.
b. Additional debt can be issued more cheaply than the original debt.
c. Interest is deductible for tax purposes.
d. There should be no difference; cost of debt is the same as the bonds' market yield.
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