Gold is used by investors to provide hedge against market

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1. An asset like gold is used by investors to provide a hedge against market movements. That is, when the market starts falling, gold prices increase as investors move money from stocks to gold. If CAPM is true, we would therefore expect the expected return to gold to be:

less than the expected return to the market.

more than the expected return to the market.

more than or less the expected return to the market depending upon the volatility of the market returns.

zero.

2. Which of the following is should not be included in cash flows (CFFA) for capital budgeting projects?

a. opportunity cost

b. interest expense

c. taxes

d. changes to net working capital

e. side effects (such as erosion or synergies)

Reference no: EM132053132

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