7.What does it mean if we determine that a stock has a beta coefficient of 1.2?

a.That the stock exhibits the same volatility as the market.

b.That the stock exhibits less volatility than the market.

c.That the stock is a bad investment.

d.That the stock exhibits more volatility than the market.

8.Investors must be compensated for bearing risk.What specific component of risk must investors be compensated for?

a.Market Risk.

b.Diversifiable Risk.

c.Total Risk.

d.Default Risk.

9.If the Risk Free Rate = 3%, the Market Risk Premium = 5%, and a stock's beta coefficient = 1.5 what would the CAPM say that the required return on the stock would be?

a.5%

b.8%

c.10.5%

d.9.5%