Reference no: EM133002207

1.If you invest in two stocks, and their values both rise on one day and then fall on the next day, they have __________.

• a large covariance
• a negative beta value
• a zero covariance
• a positive beta value

2.Which of the following credit ratings would make a country or company have the easiest time raising capital?

• BBB
• CC
• AAA
• A

3.Which of the following is a tenet of semi-strong-form efficiency?

• Historical data can be used to generate excess returns in the present day.
• Share prices respond immediately to new information that is made public.
• Individual investors can "beat" the market if enough information is made public.
• Some forms of fundamental analysis can provide investors excess returns.

4.Select the true statement about the bankruptcy process.

• Corporations file bankruptcy petitions with the states.
• A company receives a stay from any collections activity after filing a bankruptcy petition.
• A Chapter 7 bankruptcy allows a company to restructure its debt.
• A bankruptcy reorganization plan is voted on by a company's shareholders.

5.Select one reason a company's capital structure may include more equity than debt.

• Relying too heavily on debt can increase the interest rate that a company must pay on its debt.
• Equity has significant tax advantages that debt does not.
• Taking on more equity means that a company will be more leveraged.
• Too much debt will decrease a company's volatility.