Exam 12: An Alternative View of Risk and Return: the Arbitrage Pricing Theory

If the expected return on the stock is 6%,and no unexpected news concerning the stock surfaces,calculate the stock's total return.

(Multiple Choice)

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Question 21

A company owning gold mines will probably have a ___ inflation beta because an _ increase in inflation is usually associated with an increase in gold prices.

(Multiple Choice)

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Question 22

Suppose the Binder Corporation's common stock has a return of 17%.Assume the risk-free rate is 5%,the expected market return is 8%,and no unsystematic influence affected Binder's return.The beta for Binder is:

(Multiple Choice)

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Question 23

Systematic risk is defined as:

(Multiple Choice)

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Question 24

If the expected rate of inflation was 3% and the actual rate was 6.2%;the systematic response coefficient from inflation, $\beta$ _I,would result in a change in any security return of ___ $\beta$ _I.

(Multiple Choice)

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Question 25

To estimate the cost of equity capital for a firm using the CAPM,it is necessary to have:

(Multiple Choice)

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Question 26

The Fama-French three factor model predicts the expected return on a portfolio increases:

(Multiple Choice)

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Question 27

If company A,a medical research company,makes a new product discovery and their stock rises 5%,this will have:

(Multiple Choice)

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Question 28

What would not be true about a GNP beta?

(Multiple Choice)

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Question 29

A value company is defined as one that:

(Multiple Choice)

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Question 30

The betas along with the factors in the APT adjust the expected return for:

(Multiple Choice)

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Question 31

Assume that the single factor APT model applies and a portfolio exists such that 2/3 of the funds are invested in Security Q and the rest in the risk-free asset.Security Q has a beta of 1.5.The portfolio has a beta of:

(Multiple Choice)

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Question 32

Calculate the stock's total return if the company announces that they had an industrial accident and the operating facilities will close down for some time thus resulting in a loss by the company of 7% in return.

(Multiple Choice)

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Question 33

Style portfolios are characterized by:

(Multiple Choice)

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Question 34

The term Corr( $\varepsilon$ R, $\varepsilon$ T)= 0 tells us that:

(Multiple Choice)

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Question 35

Suppose the MiniCD Corporation's common stock has a return of 12%.Assume the risk-free rate is 4%,the expected market return is 9%,and no unsystematic influence affected Mini's return.The beta for MiniCD is:

(Multiple Choice)

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Question 36

Explain the conceptual differences in the theoretical development of the CAPM and APT.

(Essay)

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Question 37

A security that has a beta of zero will have an expected return of:

(Multiple Choice)

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Question 38

A criticism of the CAPM is that it:

(Multiple Choice)

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Question 39

The Fama-French three factor model includes the following factors:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 45

If the expected return on the stock is 6%,and no unexpected news concerning the stock surfaces,calculate the stock's total return.

A company owning gold mines will probably have a ___ inflation beta because an _ increase in inflation is usually associated with an increase in gold prices.

Suppose the Binder Corporation's common stock has a return of 17%.Assume the risk-free rate is 5%,the expected market return is 8%,and no unsystematic influence affected Binder's return.The beta for Binder is:

Systematic risk is defined as:

If the expected rate of inflation was 3% and the actual rate was 6.2%;the systematic response coefficient from inflation, $\beta$ _I,would result in a change in any security return of ___ $\beta$ _I.

To estimate the cost of equity capital for a firm using the CAPM,it is necessary to have:

The Fama-French three factor model predicts the expected return on a portfolio increases:

If company A,a medical research company,makes a new product discovery and their stock rises 5%,this will have:

What would not be true about a GNP beta?

A value company is defined as one that:

The betas along with the factors in the APT adjust the expected return for:

Assume that the single factor APT model applies and a portfolio exists such that 2/3 of the funds are invested in Security Q and the rest in the risk-free asset.Security Q has a beta of 1.5.The portfolio has a beta of:

Calculate the stock's total return if the company announces that they had an industrial accident and the operating facilities will close down for some time thus resulting in a loss by the company of 7% in return.

Style portfolios are characterized by:

The term Corr( $\varepsilon$ R, $\varepsilon$ T)= 0 tells us that:

Suppose the MiniCD Corporation's common stock has a return of 12%.Assume the risk-free rate is 4%,the expected market return is 9%,and no unsystematic influence affected Mini's return.The beta for MiniCD is:

Explain the conceptual differences in the theoretical development of the CAPM and APT.

A security that has a beta of zero will have an expected return of:

A criticism of the CAPM is that it:

The Fama-French three factor model includes the following factors:

Introduction to Corporate Finance

Financial Statements and Cash Flow

Financial Statements Analysis and Long-Term Planning

Net Present Value and Other Investment Rules

Interest Rates and Bond Valuation

Risk and Return: Lessons From Market History

Return and Risk: the Capital Asset Pricing Model

Efficient Capital Markets and Behavioral Challenges

Long-Term Financing: an Introduction

Raising Capital

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

International Corporate Finance

Filters

Exam 12: An Alternative View of Risk and Return: the Arbitrage Pricing Theory

If the expected return on the stock is 6%,and no unexpected news concerning the stock surfaces,calculate the stock's total return.

A company owning gold mines will probably have a _____ inflation beta because an ___ increase in inflation is usually associated with an increase in gold prices.

Suppose the Binder Corporation's common stock has a return of 17%.Assume the risk-free rate is 5%,the expected market return is 8%,and no unsystematic influence affected Binder's return.The beta for Binder is:

Systematic risk is defined as:

If the expected rate of inflation was 3% and the actual rate was 6.2%;the systematic response coefficient from inflation, β\betaβ I,would result in a change in any security return of ___ β\betaβ I.

To estimate the cost of equity capital for a firm using the CAPM,it is necessary to have:

The Fama-French three factor model predicts the expected return on a portfolio increases:

If company A,a medical research company,makes a new product discovery and their stock rises 5%,this will have:

What would not be true about a GNP beta?

A value company is defined as one that:

The betas along with the factors in the APT adjust the expected return for:

Assume that the single factor APT model applies and a portfolio exists such that 2/3 of the funds are invested in Security Q and the rest in the risk-free asset.Security Q has a beta of 1.5.The portfolio has a beta of:

Calculate the stock's total return if the company announces that they had an industrial accident and the operating facilities will close down for some time thus resulting in a loss by the company of 7% in return.

Style portfolios are characterized by:

The term Corr( ε\varepsilonε R, ε\varepsilonε T)= 0 tells us that:

Suppose the MiniCD Corporation's common stock has a return of 12%.Assume the risk-free rate is 4%,the expected market return is 9%,and no unsystematic influence affected Mini's return.The beta for MiniCD is:

Explain the conceptual differences in the theoretical development of the CAPM and APT.

A security that has a beta of zero will have an expected return of:

A criticism of the CAPM is that it:

The Fama-French three factor model includes the following factors:

Introduction to Corporate Finance

Financial Statements and Cash Flow

Financial Statements Analysis and Long-Term Planning

Net Present Value and Other Investment Rules

Interest Rates and Bond Valuation

Risk and Return: Lessons From Market History

Return and Risk: the Capital Asset Pricing Model

Efficient Capital Markets and Behavioral Challenges

Long-Term Financing: an Introduction

Raising Capital

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

International Corporate Finance

Filters

A company owning gold mines will probably have a ___ inflation beta because an _ increase in inflation is usually associated with an increase in gold prices.

If the expected rate of inflation was 3% and the actual rate was 6.2%;the systematic response coefficient from inflation, $\beta$ _I,would result in a change in any security return of ___ $\beta$ _I.

The term Corr( $\varepsilon$ R, $\varepsilon$ T)= 0 tells us that: