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1.You are considering a 2-factor model using the Arbitrage Pricing Theory (APT) to price a stock. You determine that the risk premiums on the two factors are 6% and 4% respectively. You are also aware that the risk free rate is 4%. If the stock you are examining has a beta on factor 1 of 1.3, and an expected return of 16%, what is the beta on factor 2?
a. 1.67 b.0 c. 1.33 d. 2.00 e. 1.05
2.Based on the mean-variance criterion, which of the following portfolios is considered more superior to (i.e. dominates) the other portfolios.
a return = 0.10; std dev = 0.25 b. return = 0.10; std dev = 0.20 c Can't be determined d. return = 0.15; std dev = 0.25 e return = 0.15; std dev = 0.20
3.We can represent the return-Beta relationship, according to the CAPM model using the:
a. Capital Market Line (CML) b. Security Market Line (SML) c. Efficient frontier with a risk-free asset d. Efficient frontier e. Risk-free rate
After plotting demand for four periods, an emergency room manager has concluded that a trend-adjusted exponential smoothing model is appropriate to predict future demand. The initial estimate of trend is based on the net change of 30 for the three..
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A pizza company was considering a campaign which included placing a newspaper ad in the local paper to entice customer to get a free pizza.
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