BUSI 530 Quiz Risk and Financing
BUSI 530 Quiz: Risk and Financing
- Although several stock indexes are available to inform investors of market changes, the Dow Jones Industrial Average:
- “Dow up 14. Story at 6:00.” This means that:
- The variance of an investment’s returns is a measure of the:
- The actual real rate of return on an investment will be positive as long as the:
- What is the beta of a 3-stock portfolio including 25% of stock A with a beta of 0.90, 40% of stock B with a beta of 1.05, and 35% of stock C with a beta of 1.73?
- The required risk premium for any investment is given by the security market line. line: page 336
- The average of the betas for all stocks is:
- If the line measuring a stock’s historic returns against the market’s historic returns has a slope greater than 1.0, then the:
- A firm’s WACC:
- As a firm increases its debt ratio, debtholders are likely to demand higher rates of return.
- An efficient capital market is one in which:
- Bonds that have been sold only to a limited number of institutional investors are considered:
- Suppose a firm needs fresh capital, but its management does not want to give up its controlling interest. The existing shares could be labeled Class A, and then Class B shares with limited voting rights could be issued to outside investors.
- If an incompetent management team controls a large block of votes, it may use these votes to stay in control.
- One way in which control of a corporation can be removed from the current board of directors is to: FIGHT A PROXY CONTEST
- The SEC requires the sale of a private placement to be limited to a small number of knowledgeable investors
- In many countries it is common even for large businesses to remain privately owned.
- Stock underwriters are:
- Firms go public primarily to
- hen a public company makes a general cash offer of debt or equity, it essentially follows the same procedure used when it first went public
- When asked about key factors of debt policy, financial managers commonly mention the tax advantage of debt and the importance of maintaining their credit rating.
- MM’s proposition II without taxes states that the:
- Leverage will ________ shareholders’ expected return and ________ their risk.
- If a firm’s expected return on equity equals its expected return on assets, then the:
- Debt financing affects neither the business risk nor the financial risk of the firm.