Exam 12: Behavioral Finance and Technical Analysis

The risk-free rate is 4 percent.The expected market rate of return is 11 percent.If you expect CAT with a beta of 1.0 to offer a rate of return of 11 percent,you should

The risk-free rate is 4 percent.The expected market rate of return is 11 percent.If you expect CAT with a beta of 1.0 to offer a rate of return of 13 percent,you should

As a financial analyst,you are tasked with evaluating a capital budgeting project.You were instructed to use the IRR method and you need to determine an appropriate hurdle rate.The risk-free rate is 4 percent and the expected market rate of return is 11 percent.Your company has a beta of 0.67 and the project that you are evaluating is considered to have risk equal to the average project that the company has accepted in the past.According to CAPM,the appropriate hurdle rate would be ______%.

An underpriced security will plot

You invest $200 in security A with a beta of 1.4 and $800 in security B with a beta of 0.3.The beta of the resulting portfolio is

Discuss how the CAPM might be used in capital budgeting decisions and utility rate decisions.

A security has an expected rate of return of 0.13 and a beta of 2.1.The market expected rate of return is 0.09 and the risk-free rate is 0.045.The alpha of the stock is

Discuss the differences between the capital market line and the security market line.

According to the Capital Asset Pricing Model (CAPM),

Your opinion is that Boeing has an expected rate of return of 0.08.It has a beta of 0.92.The risk-free rate is 0.04 and the market expected rate of return is 0.10.According to the Capital Asset Pricing Model,this security is

Which statement is not true regarding the market portfolio?

Your opinion is that CSCO has an expected rate of return of 0.15.It has a beta of 1.3.The risk-free rate is 0.04 and the market expected rate of return is 0.115.According to the Capital Asset Pricing Model,this security is

The Security Market Line (SML)is

Which statement is not true regarding the Capital Market Line (CML)?

Your personal opinion is that a security has an expected rate of return of 0.11.It has a beta of 1.5.The risk-free rate is 0.05 and the market expected rate of return is 0.09.According to the Capital Asset Pricing Model,this security is

Which of the following statements about the mutual fund theorem is true? I.It is similar to the separation property. II.It implies that a passive investment strategy can be efficient. III.It implies that efficient portfolios can be formed only through active strategies. IV.It means that professional managers have superior security selection strategies.

Which statement is true regarding the market portfolio?

According to the Capital Asset Pricing Model (CAPM),overpriced securities

You invest $200 in security A with a beta of 1.4 and $800 in security B with a beta of 0.3.The beta of the resulting portfolio is

According to the Capital Asset Pricing Model (CAPM),the expected rate of return on any security is equal to