Quiz Ch 07 – Action for Stocks with Negative Alphas
Essentials of Investments
Bodie, Kane, and Marcus
12th Edition
What is the recommended course of action for stocks displaying negative alphas?
What is the recommended course of action for stocks displaying negative alphas?
What percentage of financial managers employ CAPM for cost of capital estimation?
What does a stock’s alpha quantify?
For which types of investments is the Security Market Line (SML) applicable, and for which types is the Capital Market Line (CML) applicable?
What strategy enables individuals to gain from an arbitrage opportunity?
What assumptions does the simple CAPM model make?
What aspect of risk does beta measure?
What value does research suggest that a firm’s beta tends to approach over time?
What beta value is assigned to the market portfolio?
What role does a stock’s beta play in a single-factor market model?