1. What is the beta of a security where the expected return is triple that of the stock market, there is no correlation coefficient relative to the U.S. stock market (that is, the correlation coefficient between the security and the stock market is 0), and the standard deviation of the stock market is 25%?
a. 0.00
b. 1.00
c. 1.25
d. 2.00
2. Which of the following actions would NOT help a firm's growth problem if its actual sales growth exceeds its sustainable rate of growth?
I. Increase dividends
II. Prune away less-profitable products
III. Decrease financial leverage
IV. Repurchase shares
a. I and IV only
b. I and III only
c. I, II, and IV only
d. I, III, and IV only
e. I, II, III, and IV
3. Which of the following statements are NOT true?
I. Shelf registrations and private placements are examples of seasoned security issues.
II. Issue costs for debt are typically larger than issue costs for equity.
III. In the steps a company takes to prepare for an IPO, the "road show" precedes the "bake-off".
IV. Bearer bonds make it easier for investors to avoid paying taxes on interest income.
a. III and IV only
b. II and III only
c. II, III, and IV only
d. I, III, and IV only
e. I, II, III, and IV