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M1 TSE Market Finance, Ch5, CAPM Flashcards | StudBud

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M1 TSE Market Finance, Ch5, CAPM

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1
Q2(bis). If a stock’s expected return plots under the Security Market Line, then the stock should have:
A small beta
A negative alpha
both market risk and company's specific risk
A positive alpha
2
Q3. If a stock has a beta of 1.5 and the market return is expected to increase by 2%...
the stock return is expected to decline by 2%
the stock return is expected to decline by 3%
the stock return is expected to rise by 2%
the stock return is expected to rise by 3%
3
Q5. If the risk-free rate is 3% and the expected return on a stock with a beta of 1.5 is 15%...
The market risk premium should be 5%
The market risk premium should be 12%
The market risk premium should be 8%
The market risk premium should be 15%
4
The Security Market Line represents the relationship between ————.
the nonsystematic risk and expected return on a security
the systematic risk and expected return on a security
None of the above
the total risk and expected return on a security
5
Q1. According to the CAPM:
The expected return of a stock will be doubled if its beta doubles
A stock's risk premium depends on its beta
All of the above are correct
I don't know
6
Q2. If a stock’s expected return plots under the Security Market Line, then the stock:
has high idiosyncratic risk
is undervalued
has low idiosyncratic risk
is overvalued