The ordinary equity of MB Construction has a beta of 1.47 and an actual expected return of 15.26%. The risk-free rate of return is 4.3% and the market rate of return is 12.01%. Which one of the following statements is true given this information? (a) The actual expected return will graph above the Security Market Line (b) The equity is under-priced (c) The equity has less systematic risk than the overall market (d) The actual expected return indicates the equity is currently overpriced (e) Both (c) and (d) are correct. Which one of the following states that a firm's cost of equity capital is directly and proportionally related to the firm's capital structure? (a) M&M Proposition I (b) M&M Proposition II (c) Capital Asset Pricing Model (d) Law of one Price
F1.
The ordinary equity of MB Construction has a beta of 1.47 and an actual expected return of 15.26%.
The risk-free
following statements is true given this information?
(a) The actual expected return will graph above the Security Market Line
(b) The equity is under-priced
(c) The equity has less systematic risk than the overall market
(d) The actual expected
(e) Both (c) and (d) are correct.
Which one of the following states that a firm's
related to the firm's capital structure?
(a) M&M Proposition I
(b) M&M Proposition II
(c)
(d) Law of one Price
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