4. A well-diversified portfolio has no (negligible): A) Unique Risk B) Market Risk C) Systematic...
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4. A well-diversified portfolio has no (negligible): A) Unique Risk B) Market Risk C) Systematic Risk D) Total Risk E) Asymmetric Risk 5. Which of the following is (are) correct A) The CAPM provides a model with which to view the trade-off between risk and expected return for equity investments. B) The CAPM can be used to forecast expected return with a high degree of accuracy. C) The SML intercept on the y-axis represents the market risk premium. D) Both A \& C are correct. E) Both B \& C are correct. 6. New projects can be evaluated using the firm's weighted average cost of capital providing that the: A) Firm does not pay taxes B) Firm is all equity financed C) New projects have the same risk as existing assets D) Cost of debt is less than the cost of equity E) The firm's beta is greater than zero. 7. All else the same, a higher corporate tax rate A. Will increase the WACC of a firm with debt and equity in its capital structure B. Will decrease the WACC of a firm with only equity in its capital structure C. Will not affect the WACC of a firm with debt in its capital structure D. Will decrease the WACC of a firm with some debt in its capital structure E. Will increase the WACC of a firm with only equity in its capital structure
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