Which statement is correct?

• A. An IPO is carried out pursuant to regulations under the Securities Exchange Act of 1934.
• B. Common stock cannot have a beta that is less than zero.
• C. Systematic risk is reduced through portfolio diversification.
• D. None of the above are correct.

In order from smallest to largest:

• A. burn, current, acid
• B. current, burn, acid
• C. burn, acid, current
• D. current, acid, burn
• E. acid, current, burn

Which risk premium would have the smallest default premium component?

• A. the yield on commercial paper
• B. the yield on a three-month T-bill
• C. the yield on a 20-year corporate bond
• D. the APR on a car loan

A one-year Treasury instrument is issued at a quote of 98.70. Rounded to two decimal places as a percent, the yield is Blank 1. Fill in the blank, read surrounding text. %.

The cost of debt is less than which of the following?

• A.

• B.

• C.

  The cost of debt is less than both A. and B.

• D.

  The cost of debt is less than neither A. nor B.

The common stock of Company A has a higher beta than the common stock of Company B. Which statement must be true?

• A. The discount rate calculated by the CAPM for Company A will be lower than the discount rate calculated by the CAPM for Company B.
• B. The price volatility of Company A common stock will be less than the price volatility of Company B common stock.
• C. Both A. and B. must be true.
• D. Neither a. nor b. must be true.