Flervalg Flashcards
According to the security market line, the expected return of any security is a function of:
Systematic risk
In the figure, what is the line from Rf through M called?
Security market line (SML)
The term structure of intrest rates are constructed of?
- Intrest rate risk premium
- Real rate
- Inflation premium
Both [blank] and [blank] measure the responsiveness of a security to movement in the market.
Beta and covariance
PE ratio is a function of which factors?
- The type of accounting method used by a firm
- The per share amount of the firms valuable growth opportunities
- The risk of the stock
From a shareholders perspective, which break even point(s) is most important?
Financial break-even
When considering risk analysis, which of the follwing is correct?
Forecasting risk is the risk that a bad decision is made because of errors in the projected cash flows
From a shareholders perspective. A project that exceeds the accounting and cash break even points hould under all circumstances be accepted
With scenario analysis, one variable is examined over a broad range of values
With sensitivity analysis, all variables are examined for a limited range of values
Forecasting risk is the risk that a bad decision is made because of errors in the projected cash flows
When considering risk analysis, which of the following is correct?
With sensitivity analysis, all variables are examined for limited range of values
From a shareholders perspective. A project that exceeds the accounting and cash break even points should under all circumstances be accepted.
With scenario analysis, one variable is examined over a broad range of values.
Forecasting risk is the risk that a bad decisions is made because of errors in projected cash flows
With scenario analysis, one variable is examined over a broad range of values.
Operating cash flow reflects:
Tax payment
Is it possible that a risky asset could have a beta of zero and why/why not?
Yes, as it is possible to construct a zero beta portfolio of risky assets whose return would be equal to the risk free rate.
Given the following alternatives, capital asset pricing theory asserts that portfolio returns are best explained by:
Economic factors
Specific risk
Systematic risk
Diversification
Systematic risk
True or false
Variable costs change as output changes?
True (?)
True or false
Fixed costs are not dependent on the amount of goods and services produced during the period
False
On risk and return, which of the follwing is true?
A diversified portfolio can eliminate all the risk associated with individual securities
Unsystematic risk increases proportionally with increased number of securities in a portfolio
Market risk can be eliminated with diversification
Expected return on a security is positively related to the security´s BETA
Expected return on a security is positively related to the security´s BETA
When considering the Payback period method which of the following is correct?
- The payback period is the cost of the investment divided by the annual cash flow.
- The payback period does account for what happens after payback, taking into account the overall profitability of an investment.
- The payback period disregards the time value of money
- Shorter paybacks mean more attractive investments, while longer payback periods are less desirable.
- The shorter the payback, the more desirable the investment
- The payback period is the cost of the investment divided by the annual cash flow.
- The payback period disregards the time value of money
- Shorter paybacks mean more attractive investments, while longer payback periods are less desirable.
- The shorter the payback, the more desirable the investment
