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HW2QuestionsFall2014group - HW2Questions Chapter3 I....

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HW 2 QuestionsChapter 3I.Cost of Debt and Equity 1.True or False? Explain a.Investors demand higher expected rates of return on stock with more volatility. 
b.The CAPM predicts that a security with a beta of zero will provide an expected return of zero. 
c.An investor puts $10,000 in Treasury bills and $20,000 in the market portfolio will have a portfolio beta of 2. 
d.Investors demand higher expected returns from stock with returns that are highly exposed to macroeconomic changes. 
e.Investors demand higher expected rates of return from stocks with returns that are very sensitive to fluctuations in the stockmarket. 

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Term
Summer
Professor
LI
Tags
Standard Deviation, Debt, Volatility, Newmont Mining Corporation, higher expected returns

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