1. Now you get an interview opportunity for the job of financial analyst. The interviewer asks you which of the following statement is correct.
A) Equita betas measure the total risk of firms
B) The stocks with higher betas are superior to the stocks with lower betas, since the former ones have higher expected returns than the later ones.
C) the beta of the firms' equity being increased by its cash holdings in excess of its operating needs, if the capital market is perfect.
D) The beta of the firms equity being decreased by its cash holdings in excess of its operating needs, if the capital market is perfect.
2. What is the present value of a 10-year $5,000 annuity due if the discount rate is 10%?
Round your answer to the nearest dollar.
A. $57,410
B. $51,541
C. $40,723
D. $33,795
E. $30,723