Question: 15) True or False: The standard deviation and variance are absolute measures of dispersion, while the coefficient of variation is a relative measure of dispersion.

15) True or False: The standard deviation and variance are "absolute"

measures of dispersion, while the coefficient of variation is a "relative"

measure of dispersion.

16) Using the Capital Asset Pricing Model, the required rate of return

for an individual stock is equal to:

(a) Risk free rate plus the market risk premium plus the beta

coefficient

(b) Risk free rate plus the market risk premium minus the beta

coefficient

(c) Risk free rate times the market risk premium plus the beta

coefficient

(d) Risk free rate plus the market risk premium times the beta

coefficient

(e) Risk free rate times the market risk premium minus the beta

coefficient

17) The APT [Arbitrage Pricing Theory] model posits that the most

significant factors influencing the required rate of return are:

(a) Inflation and industrial/economic growth

(b) Inflation, industrial/economic growth and risk premiums

(c) Inflation, industrial/economic growth, risk premiums, risk free rate

and a random error term

(d) Industrial/economic growth, risk premiums and a random error

term

(e) Risk free rate, random error term, and risk premiums

(18) Why is the required rate of return the most dynamic or important

variable used in valuation?

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