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FINC321-Second Esam (Fall "18 (t point each) t. The risk-free rate is a. The interest rate the bank offers for term deposits D Nominal or quoted rate plus inflation premium e. Treasury bond yield d. Real risk-free interest rate plus inflation premium 2. Apex Roofing's stock has a beta of 1.50, its required rate of return is 14.00%, and the risk-free rate is 5.00%, what is the market return? a. 10.50% b. 11.00% 11.50% d.12.00% c. 3. Consider the following two projects: Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Discount C/F C/F N/A N/A Rate 15% C/F CF C/F C/F C/F C/F 30 35 40 Alpha80 Beta 79 20 25 80 25 25 25 25 25 25 - 25 -16% The payback period for project Alpha is closest to: A) 3.2 years B) 2.9 years C) 3.1 years D) 2.6 years Which of the following statements best describes what would be expected to happen as you randomly select stocks and add them to your portfolio? 4. a. Adding more stock will reduce the portfolio's diversifiable risk. b. Adding more stock will increase the portfolio's diversifiable risk. c. Adding more stock will reduce the portfolio's beta. d. Adding more stock will increase the portfolio's beta