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Under the free cash flow approach to valuation:
share value is found by subtracting the value of debt and preferred stock from the enterprise value
Which of the following bonds has the greatest price change for a given change in interest rates?
A 10-year zero coupon bond
True or False? The weaker the correlation between two assets the smaller the reduction of risk attainable by holding positive amounts of these assets in a portfolio.
False
The primary contribution to portfolio risk from a single asset comes from its ????? with all other assets.
Covariance
Which of the following characterisitcs of return is represented in"percent squared" units?
Variance
The Fama-French model asserts that a firm's exposure to SMB and HML risk are important in explaining expected returns. Which of the following is consistent with the F-F model?
A firm that has a positive size beta and a positive book to market beta has high expected return.
The ??????? tells us the compositionof the optimal portfolio from a theoretical standpoint.
CAPM
Economists adopt the assumption of ??????? as a way to consider how the market will reach equilibrium