1. Suppose the CAPM holds and you have the following information on different assets:
Asset Systematic Risk Firm-specific risk
A 0.12 0.11
B 0.11 0.17
C 0.10 0.14
Which one of the following is true?
A) Asset A has the largest Beta
B) Asset B has the largest Beta
2. Beta measures-
a. Total risk
b. Market risk
c. Stand alone risk
d. Risk Premium
e. Correlation coefficient
3. If a project has an initial outlay of $38,000 and cash flows of $13,000 per year for the next 5 years, what is the IRR of this project? (Answer to the nearest tenth of a percent, e.g. 12.3).