Question: please help determine if true or false! Consider a firm with no constraints in raising funds. The firm sees multiple projects with positive NPV. In




Consider a firm with no constraints in raising funds. The firm sees multiple projects with positive NPV. In order to maximize the firm value, it should choose all positiveNPV projects. True False Suppose that stocks are exposed to independent risks only so that stock has the following return structure: Ri,t=mi+ei,t where mi is the average return, and ei,t is the independent risk. If we construct a portfolio including more and more stocks, the portfolio volatility gradually decreases and eventually converges to zero. True False Consider a stock in which dividends will grow at a constant rate of g every year, and the payout ratio stays unchanged. The stock's price-earnings ratio increases with a rise in g. True False According to the Capital Asset Pricing Model, the required return on a stock is determined by its amount of risk measured by the standard deviation of its returns. True False An analyst wants to measure the beta of Apple stock using data on its monthly returns. In a scatter plot where the X-axis is the return on Apple stock, and the Y-axis is the market portfolio return, the slope of the linear trend line is the beta. True False
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
