52. In theory, the decision maker should view market risk as being of primary importance. However, within-firm, or corporate, risk is relevant to a firm's A. Well-diversified stockholders, because it may affect debt capacity and operating income.B. Management, because it affects job stability.C. Creditors, because it affects the firm's credit worthiness.D.All of the above are correct.E. Only answers a and c are correct. 53. Which of the following statements is most correct? 54. Monte Carlo simulation 55. Which of the following methods involves calculating an average beta for firms in a similar business and then applying that beta to determine the beta of its own project?
56. If the firm is being operated so as to maximize shareholder wealth, and if our basic assumptions concerning the relationship between risk and return are true, then which of the following should be true? A. If the beta of the asset is larger than the firm's beta, then the required return on the asset is less than the required return on the firm.B. If the beta of the asset is smaller than the firm's beta, then the required return on the asset is greater than the required return on the firm.C. If the beta of the asset is greater than the corporate beta prior to the addition of that asset, then the corporate beta afterthe purchase of the asset will be smaller than the original corporate beta.D.If the beta of an asset is larger than the corporate beta prior to the addition of that asset, then the required return on the firm will be greater afterthe purchase of that asset than prior to its purchase.E. None of the above is a true statement.
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