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Which is true about the private investors

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Reference no: EM132795918

Problem 1: Which of following is true about the private investors?

a. In a private-to-public transaction, market beta has to be scaled up to capture the risk exposure of investors.

b. In a private-to-private transaction, market beta has to be scaled down to capture the higher risk-aversion of the undiversified investor.

c. Undiversified investors require a higher rate of return from the same investment, leading to a lower value of the investment.

d. Undiversified investors view the same investments less risky than more diversified investors.

Problem 2: Empirical research finds which of the following factors is positively correlated with the liquidity discount of the restricted stocks?

a. Issuer size

b. Issuer profitability

c. Issuer's cash holding level

d. The restricted stocks' vesting period (the time period when you cannot trade the stock)

Reference no: EM132795918

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