1. Estimating the rate of return for any portfolio lying on the security market line requires which of the following?
risk-free rate, factor beta, and the industry beta
portfolio beta, the risk-free rate, and the market risk premium
market rate of return and the portfolio beta
factor beta and the market risk premium
market rate of return, market beta, and the risk-free rate
2. If a debt is subordinated, it:
must give preference to the secured creditors in the event of default.
is secondary to equity.
has a higher priority status than secured creditors.
is treated as an equity security.
has been issued because the company is in default.