The event of company becoming bankrupt

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Reference no: EM131860409

1. Because shareholders are the last to receive any distribution of assets in the event of a company becoming bankrupt, generally, they expect to receive

a. A lower rate of return than debt holders

b. A higher rate of return than debt holders

c. The risk-free rate of return

d. An arbitrage rate of return

2. If the returns on two assets are perfectly positively correlated and an equally weighted portfolio consisting of the two assets is formed, the standard deviation of the resulting portfolio will be:

a. Below the average of the standard deviations of the two assets

b. Above the average of the standard deviations of the two assets

c. The average of the standard deviations of the two assets

d. Cannot be determined

Reference no: EM131860409

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