Unique risks when calculating expected rates of return

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Reference no: EM132056051

1. Why do stock market investors seem to ignore unique risks when calculating expected rates of return?

A) There is no method for quantifying unique risks

B) Unique risks are assumed to be diversified away.

C) Unique risks are compensated by the risk-free rate

D) Beta includes a component to compensate for unique risk

2. A firm's WACC:

A) Is the proper discount rate for every project the firm undertakes

B) Is used to value all of the firm's existing projects

C) Is a benchmark discount rate that is adjusted for the riskines of each project

D) Is an informational value only and should never be used as a discount rate

Reference no: EM132056051

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