Assume the risk free interest rate is 3%, the market rate of return is 7% and beta for company X is 2. Given this information, the non-diversifiable risk for this company is a) 8% b) 4% c) 2 d) 6% Referring to question 1, the required rate of return for the company is a) 2% b) 9% c) 8% d) 11% Referring to question 1, this company has a risk that is a) Equal to the market risk b) We cannot tell c) More than the market risk d) Less than the market risk
Assume the risk free interest rate is 3%, the market rate of return is 7% and beta for company X is 2. Given this information, the non-diversifiable risk for this company is a) 8% b) 4% c) 2 d) 6% Referring to question 1, the required rate of return for the company is a) 2% b) 9% c) 8% d) 11% Referring to question 1, this company has a risk that is a) Equal to the market risk b) We cannot tell c) More than the market risk d) Less than the market risk
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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this is actually one question with three parts, could you answer it please
Transcribed Image Text:**Investment Risk and Return Quiz**
1. Assume the risk-free interest rate is 3%, the market rate of return is 7%, and the beta for company X is 2. Given this information, the non-diversifiable risk for this company is:
- a) 8%
- b) 4%
- c) 2
- d) 6%
2. Referring to question 1, the required rate of return for the company is:
- a) 2%
- b) 9%
- c) 8%
- d) 11%
3. Referring to question 1, this company has a risk that is:
- a) Equal to the market risk
- b) We cannot tell
- c) More than the market risk
- d) Less than the market risk
*Note: This exercise is designed to test your understanding of risk and return in financial markets, using the Capital Asset Pricing Model (CAPM).*
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