Chapter 1 Quiz
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Which of the following statements best represents what finance is about?
How political, social, and economic forces affect corporat
(Payback period calculations) You are
considering three independent projects:
project A, project B, and project C. Given
the following free cash flow information,
calculate the payback period for each.
1. Market Risk of Stock:
American Airlines beta is 3.85, which is higher than 1. This suggests American Airlines is much more
risky the Standard and Poor 500 Index.
2. Required return based on CAPM:
According to CAPM calculation, the req