End_of_Chapter_Questions_and_Answers

End_of_Chapter_Questions_and_Answers - Chapter End...

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Chapter End Questions 1) Which of the following is most likely illegal? 2) The price of a stock will generally rise if A) Investors now are willing to accept a lower expected rate of return on the stock B) Investors now demand a higher expected rate of return on the stock 3) Suppose the S&P 500 falls from 1400 to 1300 over the next six months. In such a scenario, the investor holding a portfolio with a beta of _________ will generally earn the highest six-month return. A) 0.5 B) 1.0 C) 1.5 4) Compare two stocks, Whirlpool, which builds home appliances, and Abbott Labs, which makes health care products. Which stock will have the higher beta? A) Abbott Labs B) Whirlpool 5) What product attributes allow some companies to earn consistently high profits year after year? A) High switching costs B) Low switching costs 6) Consumers have spent an increasing fraction of their incomes on _____over the past 30 years. A) housing rent B) recreational products 7) Consumers have spent a decreasing fraction of their incomes on food over the past 30 years. A) True B) False
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