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Diversification risk and potential rate of return. Leverage risk and of return. Which of the following...
Which of the following statements is correct? Select one: a. Leverage reduces risk of debt even when there is no risk of default b. Leverage increases risk of debt even when there is no risk of default c. Leverage increases risk of equity even when there is no risk of default d. Leverage reduces risk of equity even when there is no risk of default
12. Risk and Return Please analytically explain the power of diversification according to the following equation. 0;=+0+" cov
Which of the following generally indicates a negative change? The asset turnover increases. The financial leverage decreases. The return on equity increases. The earnings per share increases.
Which statements are TRUE regarding risk and return? Statement I: Diversification is the process of removing systematic risk from a portfolio. Statement II: In general, the greater the risk, the greater the return required by an investor. Statement III: Investors should focus on real returns if they are concerned about the purchasing power of their wealth. Options de la question 35 : Statement I only Statements I and II only Cannot tell from the given information Statements I and III...
Which of the following stocks is correctly priced if the risk-free rate of return is 3.2 percent and the market rate of return is 11.76 percent? More than one may be correct Stock Beta Expected Return A 0.87 11.03% B 1.09 12.50% C 1.18 13.21% D 1.34 15.02% E 1.62 17.07%
Do you think that by increasing leverage, the firm increases its profit potential and, simultaneously, risk? please answer with 150-200 words.
Which one of the following stocks is correctly priced if the risk-free rate of return is 3.9 percent and the market risk premium is 8.4 percent? Stock Beta .77 1.55 1.36 1.33 .95 Expected Return 7.86% 12.65 17.33 11.93 11.88 Ο Stock E Ο Stock A Ο Stock D Ο Stock B Ο Stock C
The risk-free rate of return is 3.7 percent. The risk premium on the market portfolio is 8.8 percent. The table below has information on 5 stocks. Can you figure out which one of them is correctly priced (.e., correctly compensates investors for the amount of systematic risk they are facing)? Stock Beta | #1 #2 Expected Return 9.47% 12.03 14.44 15.80 18.37 0.64 0.97 1.22 1.37 1.68 #3 #4 Multiple Choice O O O Multiple Choice Ο Ο Ο Ο...
The risk reduction through diversification in a portfolio of two stocks: A. (Both statements are correct.) B. (Not enough information.) C. increases as the correlation between the stocks declines. D. decreases as the correlation between the stocks rises.
Determine the expected return of a company's stock given a risk free rate of 7%, an expected market return of 12%, a market risk premium of 5% and a company Beta of 1.5. O 0.115 O 0.125 O 0.135 O 0.145 Which of the following is NOT a cost to the firm of increasing debt financing? the cost of common equity will decrease. Ostockholders will demand a higher return. investors will demand a higher interest rate on debt. the risk...