BUSI 408 Final Questions & Answers
-Explicitly adjusts for systematic risk
Advantages of CAPM approach:
-Applicable to all companies, as long as we can estimate beta
Advantages of the Dividend Growth Easy to understand and use
Model:
Assuming the interest on the debt is fully increases; increases
tax deductible, when firms issue more
debt, the present value of the tax shield
on debt _____ while the present value of
the financial distress costs _____.
-decreases; decreases
-increases; increases
-decreases; remains constant
-decreases; increases
-increases; remains constant
, BUSI 408 Final Questions & Answers
As we add more diverse securities to a total and unsystematic
portfolio, the ____ risks of the portfolio
will decrease.
total and systematic
Incorrect
systematic and unsystematic
total and unsystematic
unsystematic
systematic
The average compound return earned geometric
per year over a multi-year period is
called the _____ average return.
Based on the period of 1926 through small-company stocks
2017, _____ have tended to outperform
other securities over the long-term.
U.S. Treasury bills
large-company stocks
long-term corporate bonds
small-company stocks
long-term government bonds
, BUSI 408 Final Questions & Answers
The CAPM has an advantage over DDM explicitly adjusts for risk
because the CAPM:
explicitly adjusts for risk.
applies to firms that pay dividends.
has no measurement risk.
specifically considers a firm's rate of
growth.
ignores changes in the overall market
over time.
-Explicitly adjusts for systematic risk
Advantages of CAPM approach:
-Applicable to all companies, as long as we can estimate beta
Advantages of the Dividend Growth Easy to understand and use
Model:
Assuming the interest on the debt is fully increases; increases
tax deductible, when firms issue more
debt, the present value of the tax shield
on debt _____ while the present value of
the financial distress costs _____.
-decreases; decreases
-increases; increases
-decreases; remains constant
-decreases; increases
-increases; remains constant
, BUSI 408 Final Questions & Answers
As we add more diverse securities to a total and unsystematic
portfolio, the ____ risks of the portfolio
will decrease.
total and systematic
Incorrect
systematic and unsystematic
total and unsystematic
unsystematic
systematic
The average compound return earned geometric
per year over a multi-year period is
called the _____ average return.
Based on the period of 1926 through small-company stocks
2017, _____ have tended to outperform
other securities over the long-term.
U.S. Treasury bills
large-company stocks
long-term corporate bonds
small-company stocks
long-term government bonds
, BUSI 408 Final Questions & Answers
The CAPM has an advantage over DDM explicitly adjusts for risk
because the CAPM:
explicitly adjusts for risk.
applies to firms that pay dividends.
has no measurement risk.
specifically considers a firm's rate of
growth.
ignores changes in the overall market
over time.
