1. Which of the following statements are true in relation to risk and uncertainty?
A. Under conditions of risk, investors understand the probabilities underlying the expected return outcomes.
B. Under conditions of uncertainty, investors understand the probabilities underlying the expected return outcomes.
C. Both a and be are true.
D. Neither a nor b are true.
2. Which of the following best describes the expected rate of return?
A. The expected value of the distribution of future payoffs on an investment.
B. The expected value of the distribution of future returns on an investment.
C. Both a and b.
D. Neither a nor b
3. Which of the following statements are true in relation to the Capital Asset Pricing Model
A. As non-systematic risk increases, the investment's beta coefficient also increases.
B. As the expected return on the market portfolio of investments increases, the investment's overall risk premium also increases.
C. As the investment's beta coefficient increases, the market risk premium for the investment decreases.
D. All of the above are true.