Reference no: EM132659433

Problem 1: An investment paying $1,000 in 1 year, $2,000 in 2 years and $7,000 in 3 years returning 10% p.a. has a present value of:

a. 58.129.39

b. $6,002.54

C. $7,210.20

d. 57,821.19

e. None of the above

Problem 2: The time value of money is the concept that a dollar is worth:

a. more the later it is received

b. more the later it is paid

c. less the sooner it is received

d. more the sooner it is received.

e. None of the above

Problem 3: A risk-free rate of 5% and an expected market return of 12%, the CAPM predicts an expected return of which of the following given a beta of 1.6:

a. 15%

b. 16.2%

C. 17%

d. 21%.

e. None of the above

Problem 4: A risk neutral investor will assess investment alternatives based on their;

a. relative expected risks

b. relative expected returns

c. relative expected risks and returns

d. All of the above.

e. None of the above

Problem 5: Assets with betas greater than one have:

a. lower levels of non-systematic risk than the market portfolio

b. lower levels of systematic risk than the market portfolio

C. higher levels of systematic risk than the market portfolio

d. All of the above.

e. None of the above