finance final
a typical measure for the risk free rate of return is the
US Treasury bill rate
a stock with a beta of 1 has systematic or market risk equal to the typical stock in the marketplace
true
beta represents the average movement of a company's stock returns in responses to a movement in the market returns
true
the benefits of diversification occur as long as the investments in a portfolio are not perfectly positively correlated
true
which of the following types of risks is diversifiable
unsystematic, or company-unique risk
If a project is acceptable using the net present value criteria, then it will also be acceptable under the less stringent criteria of the payback period.
false
The profitability index is the ratio of the company's net income (or profits) to the initial outlay or cost of a capital budgeting project.
false
higher flotation costs will result in all of the following except
higher cost of retained earnings
cost of capital is
the rate of return that must be earned on additional investment if firm value is to remain unchanged
If a firm imposes a capital constraint on investment projects, the appropriate decision criterion is to select the set of projects that has the highest positive net present value subject to the capitalconstraint.
true
NPV is the most theoretically correct capital budgeting decision tool examined in the text.
true