【正文】 roportion to their market values.IV) It is the tangency point between the capital market line and the indifference curve.It is the tangency point between the capital market line and the indifference curve.E.It lies on the efficient frontier.C.A.10.Which statement is not true regarding the market portfolio?.E..C.A.9.The riskfree rate and the expected market rate of return are and , respectively. According to the capital asset pricing model (CAPM), the expected rate of return on a security with a beta of is equal to.E..C.A.8.The riskfree rate and the expected market rate of return are and , respectively. According to the capital asset pricing model (CAPM), the expected rate of return on security X with a beta of is equal to1.D.0.B.reinvestment risk.unsystematic risk.C.A.s rate of return is a function ofNone of the optionsunique risk.D.beta risk.B.5.According to the Capital Asset Pricing Model (CAPM) a well diversified portfolio39。reinvestment risk.E.unsystematic risk.C.A.s rate of return is a function ofvariance of returns.market risk.C.A.3.In the context of the Capital Asset Pricing Model (CAPM) the relevant risk isstandard deviation of returns.D.unique risk.B.variance of returns.beta.C.A.1.In the context of the Capital Asset Pricing Model (CAPM) the relevant measure of risk isChapter 09The Capital Asset Pricing ModelMultiple Choice Questionsunique risk.B.standard deviation of returns.D.2.In the context of the Capital Asset Pricing Model (CAPM) the relevant risk isA.systematic risk.C.variance of returns.unique risk.B.standard deviation of returns.D.4.According to the Capital Asset Pricing Model (CAPM) a well diversified portfolio39。market risk.B.unique risk.D.None of the optionss rate of return is a function ofA.unsystematic risk.C.reinvestment risk.E.6.According to the Capital Asset Pricing Model (CAPM) a well diversified portfolio39。systematic risk.B.unique risk.D.7.The market portfolio has a beta ofA.1.C...B..D...B..D..It includes all publicly traded financial assets.B.All securities in the market portfolio are held in proportion to their market values.D.All of the options are true.I onlyB.III onlyD.I, II, and IIIThe CML is the line from the riskfree rate through the market portfolio.B.The CML is also called the security market line.D.The risk measure for the CML is standard deviation.I onlyB.III onlyD.I, II, and IVthe covariance between the security39。s returns.B.s returns.C.s returns divided by the covariance between the security and market returns.D.s returns divided by the variance of the market39。15.According to the Capital Asset Pricing Model (CAPM), the expected rate of return on any security is equal toA.Rf + β [E(RM) Rf].C.E(RM) + Rf.the line that describes the expected returnbeta relationship for welldiversified portfolios only.B.the line that is tangent to the efficient frontier of all risky assets.D.All of the optionspositive betas.B.negative betas.D.18.According to the Capital Asset Pricing Model (CAPM), underpriced securities haveA.zero alphas.C.positive alphas.E.19.According to the Capital Asset Pricing Model (CAPM), overpriced securities haveA.zero alphas.C.positive alphas.positive alpha is considered overpriced.B.negative alpha is considered to be a good buy.D.21.According to the Capital Asset Pricing Model (CAPM), which one of the following statements is false?A.The expected rate of return on a security increases as its beta increases.C.In equilibrium, all securities lie on the security market line.E.22.In a welldiversified portfolioA.systematic risk is negligible.C.nondiversifiable risk is negligible.are constant over time.B.are always near zero.D.are always positive.underpriced.B.fairly priced.D.25.The riskfree rate is 7%. The expected market rate of return is 15%. If you expect a stock with a beta of to offer a rate of return of 12%, you shouldA.sell short the stock because it is overpriced.C.buy the stock because it is underpriced.E.26.You invest $600 in a security with a beta of and $400 in another security with a beta of . The beta of the resulting portfolio isA..C..E.27.A security has an expected rate of return of and a beta of . The market expected rate of return is and the riskfree rate is . The alpha of the stock isA.%.C.%.underpriced.B.fairly priced.D.29.Your opinion is that CSCO has an expected rate of return of . It has a beta of . The riskfree rate is and the market expected rate of return is . According to the Capital Asset Pricing Model, this security isA.overpriced.C.Cannot be determined from data provided.underpriced.B.fairly priced.D.None of the optionsunderpriced.B.fairly priced.D.32.Your opinion is that Boeing has an expected rate of return of . It has a beta of . The riskfree rate is and the market expected rate of return is . According to the Capital Asset Pricing Model, this security isA.overpriced.C.Cannot be determined from data provided.underpriced.B.fairly priced.D.34.As a financial analyst, you are tasked with evaluating a capital budgeting project. You were instructed to use the IRR method and