Finance Questions

Each existing share has how many rights?

What will determine the intrinsic values of the call option

T/F: An example of systematic risk would be if the stock of airlines dropped after two airplanes crashed on the same day making many passengers too nervous to fly.

The difference between the price per share with right P(old) and the price per share without the right P)(mixed)

T/F: If you invest in stocks with higher-than-average betas, you are certain to earn higher-than-average returns over the next year.

You are looking at two different stocks. IBMOB has a beta of 1.25 and Microsquish has a beta of 1.95. Which statement is true about these investments?

T/F: No matter how much total risk an asset has, only the unsystematic portion is relevant in determining the expected return on that asset.

When computing the expected return on a share of common stock (or other asset) where you have projected returns for each state of the economy along with associated probabilities of occurrence,

T/F: Systematic risk is a type of risk that influences all assets to a greater or lesser degree

X is the process of reducing the riskiness associated with individual assets by spreading an investment across numerous assets

Assume all weights are positive. 1) Can the return on the portfolio ever be lower than the lowest return on an individual security in the portfolio? 2) Can the variance of the portfolio ever be less than the lowest variance of an individual security in the portfolio?

T/F: The security market line is based on the idea that the reward-to-risk ratio must be the same for all assets in the market.

Are returns related to firm-specific risk?

T/F: Assume all of the stocks in a given industry fall as a result of an announcement about the general health of the economy. This is an example of systematic risk.

T/F: It is NOT possible to construct a portfolio with zero variance of expected returns from assets whose expected returns have positive variance individually.

Where do you find the risk-free rate on a security market line?

How is the pure time value of money measured

T/F: If the total risk of firm X is greater than that of firm Y, then the beta of firm X must be greater than that of firm Y

T/F: In an efficient market, every asset will have to provide a risk-return set on the SML

How is the amount of systematic risk measured