Assume that stock market returns do follow a single-index structure. An investment fund analyzes 60 stocks in order to construct a mean-variance efficient portfolio constrained by 60 investments. They will need to calculate ________ estimates of expected returns and ________ estimates of sensitivity coefficients to the macroeconomic factor.
A. 200; 19,900
B. 200; 200
C. 60; 60
D. 19,900; 19.900
E. None of the options are correct.
C. 60; 60
For a single-index model, n(60), expected returns and n(60) sensitivity coefficients to the macroeconomic factor must be estimated.
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Short production runs have what effect on the amount of average WIP held?
a. Increased amount of WIP b. Decreased amount of WIP c. No change to amount of WIP d. It is impossible to determine the effect of short production runs on the amount of WIP
Kylie is a carpenter. As a skilled worker, the union that Kylie is a member of is a craft union.
Answer the following statement true (T) or false (F)
Which of the following statements is correct?
A. Capital budgeting projects with fairly risky cash flows should be evaluated using relatively high discount rates (required rates of return). B. If managers want to maximize the firm's stock value, they should not be concerned with risk when making capital budgeting decisions. C. If a firm evaluates all capital budgeting projects using its existing required rate of return, its overall risk, as measured by its beta coefficient, probably will decline over time. D. If a firm has a beta coefficient that is less than 1.0, its existing required rate of return will be negatively correlated with the returns on most of the capital budgeting projects it evaluates in the future. E. A firm should use a different approach to estimate the riskiness of mutually exclusive projects than it uses to estimate the riskiness of independent projects.
Generally, increases in leverage result in ________ return and ________ risk
A) decreased; increased B) decreased; decreased C) increased; increased D) increased; decreased