1. Estimating the rate of return for any portfolio lying on the security market line requires which of the following?
market rate of return and the portfolio beta
market rate of return, market beta, and the risk-free rate
risk-free rate, factor beta, and the industry beta
factor beta and the market risk premium
portfolio beta, the risk-free rate, and the market risk premium
2. You are given these cash flows for an investment project (the time 0 cash flow is missing):
0: ______
1: +$50
2: +$60
3: +$70
4: +$80
5: +$90
6: +$100
If the payback period is between 4 and 5 years the time 0 cash flow could be _____.
a)-$385
b)-$275
c)-$450
d)-$175