An estimation by marginal investor, a higher expected return is earned on A. more risky securities B. less risky securities C. less premium D. high premium (Don't use chatgpt otherwise give 10 downvotes)

An estimation by marginal investor, a higher expected return is earned on A. more risky securities B. less risky securities C. less premium D. high premium (Don't use chatgpt otherwise give 10 downvotes)

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7: Types And Costs Of Financial Capital

Section: Chapter Questions

Problem 9EP

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1. An estimation by marginal investor, a higher expected return is earned on A. more risky securities B. less risky securities C. less premium D. high premium
Investors require a _____ return as compensation for taking ____ risk. A) higher, margin B) higher, more C) higher, convexity D) lower, margin E) lower, more F) lower, convexity
Which one of the following statements is correct? Group of answer choices The lower the average return, the greater the risk premium. The greater the volatility of returns, the greater the risk premium. The lower the volatility of returns, the greater the risk premium. The risk premium is not affected by the volatility of returns. The risk premium is unrelated to the average rate of return.
he benefit in risk reduction from adding securities Blank______ as more and more securities are added to a portfolio. Multiple choice question. remains the same increases declines
The benefit in risk reduction from adding securities Blank______ as more and more securities are added to a portfolio. Multiple choice question. increases declines remains the same
please quickly 11 The following is a correct statement concerning risk premium: A.The lower the average rate of return, the greater the risk premium B.The risk premium is not affected by the volatility of returns. C.The lower the volatility of returns, the greater the risk premium. D.The greater the volatility of returns, the greater the risk premium. E.The risk premium is not correlated to the average rate of return.
When estimating the cost of equity by use of the CAPM, three potential problems are (1) whether to use long-term or short-term rates for rRF, (2) whether or not the historical beta is the beta that investors use when evaluating the stock, and (3) how to measure the market risk premium, RPM. These problems leave us unsure of the true value of rs. a. true b. false
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QUESTION 2 For which type of risk do you get rewarded with a higher expected return? a. Firm-specific risk Ob. Total risk C. Diversifiable risk d. Unknown е. Systematic risk
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Question 1 Fill the parts in the above table that are shaded in yellow. You will notice that there are nineline items. Question 2Using the data generated in the previous question (Question 1);a) Plot the Security Market Line (SML) b) Superimpose the CAPM’s required return on the SML c) Indicate which investments will plot on, above and below the SML? d) If an investment’s expected return (mean return) does not plot on the SML, what doesit show? Identify undervalued/overvalued investments from the graph