1(i) The Book Value of Equity includes: a) Cash Flows from operating costs. b) retained earnings. c)Only the value of Treasury stock. d) Cash flows from investing activities.
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.
1(i)
The Book Value of Equity includes:
a)
b)
c)Only the value of
d) Cash flows from investing activities.
1(ii)
Zero serial correlation between stock market returns over a pre-defined one-period time interval validates:
a)Systematic variations in stock market returns.
b)Weak Form Efficiency
с)Non-zero covariance between stock returns
d)Semi-strong Form Efficiency
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