Quiz Ch 12 – Stock with Beta Greater Than 1.0
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
How would you categorize a stock with a beta greater than 1.0?
How would you categorize a stock with a beta greater than 1.0?
True or false: The opportunity cost of capital goes up when a project’s beta rises.
True or false: Beta assesses a stock’s receptivity to market risks.
True or false: There is a positive correlation between a stock’s expected return and its beta in accordance with the Capital Asset Pricing Model (CAPM).
True or false: CAPM assumes the stock market is led by well-diversified investors focused solely on market risk.
True or false: The Capital Asset Pricing Model (CAPM) is a theory that describes the connection between risk and return, asserting that the expected risk premium of any security is linked to its beta in relation to the market return.
True or false: The slope of the security market line for an index mutual fund is anticipated to be sharper than that of the S&P 500 index.
True or false: There is minimal uncertainty that the CAPM encompasses all market dynamics.
True or false: In times of economic downturns, defensive stocks often outperform due to their resilience against market fluctuations.
True or false: The gap between the market rate of return and the risk-free interest rate characterizes the market risk premium.