Embry mbaa518 6.3 - Readings and Videos Quiz 6

Jun 27th, 2016
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Question Question 1 2 / 2 pts The use of WACC to select investments is acceptable when the: NPV is positive when discounted by the WACC. correlations of all new projects are equal. risks of the projects are equal to the risk of the firm. firm is well diversified and the unsystematic risk is negligible. None of these. Question 2 2 / 2 pts The beta of a security provides an: estimate of the slope of the Capital Market Line. estimate of the slope of the Security Market Line. None of these. estimate of the market risk premium. estimate of the systematic risk of the security. Question 3 2 / 2 pts The following are methods to estimate the market risk premium: use the bond valuation model to estimate growth in bond prices with different costs of capital. use historical data to estimate future risk premium and use the dividend discount model to estimate risk premium. use the dividend discount model to estimate risk premium. use historical data to estimate future risk premi

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Embry mbaa518 6.3 - Readings and Videos Quiz 6QuestionQuestion 12 / 2 ptsThe use of WACC to select investments is acceptable when the:NPV is positive when discounted by the WACC.correlations of all new projects are equal.risks of the projects are equal to the risk of the firm.firm is well diversified and the unsystematic risk is negligible.None of these.Question 22 / 2 ptsThe beta of a security provides an:estimate of the slope of the Capital Market Line.estimate of the slope of the Security Market Line.None of these.estimate of the market risk premium.estimate of the systematic risk of the security.Question 32 / 2 ptsThe following are methods to estimate the market risk premium:use the bond valuation model to estimate growth in bond prices with different costs of capital.use historical data to estimate future risk premium and use the dividend discount model toestimate risk premium.use the dividend discount model to estimate risk premium.use historical data to estimate future risk premium.use historical data to estimate future risk premium and use the bond valuation model to estimategrowth in bond prices with different costs of capital.Question 42 / 2 ptsIf a firm has low fixed costs relative to all other firms in the same industry, a large change insales volume (either up or down) would have:a smaller change in EBIT for the firm versus the other firms.no effect in any way on the firms, as volume does not affect fixed costs.None of these.a

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