Section A: Multiple Choice Questions Q1. The correlation coefficient a. Has a range of - co to + - (minus infinity to plus infinity) b. as a range of -1 to +1 (minus 1 to plus 1) c. Is always positive d. Is always negative Q2. The payback method of project evaluation: a. Refers to the method of repaying investors - cash, debt or equity b. Uses the bond rate as the discount rate c. Measures the time taken to recoup the initial outlay for the project d. Measures the time taken to repay borrowings for the project M Section A: Multiple Choice Questions Q3. The efficient frontier: a. Covers the bottom half of the opportunity set of feasible risky portfolios b. Covers the top half of the opportunity set of feasible risky portfolios c. Is the top half of the minimum variance portfolio line d. Is the bottom half of the minimum variance portfolio line Q4. CAPM asserts that: a. The price of a security is determined only by its market risk b. The price of a security is determined by its firm-specific risk c. Rational investors hold no more than 20 individual shares in their portfolio d. Rational investors continually evaluate the risk of all shares in their portfolio Section A: Multiple Choice Questions Q5. For Australia, the real risk-free rate of return and the real risk premium have, historically, been about: a. 4% and 6% b. 4% and 10% b. 6% and 4% c. 6% and 10%