Which of the following statements regarding the Capital Allocation Line (CAL) is false? a. The slope of the CAL is also called the reward-to-volatility ratio.b. The CAL shows risk-return combinations.c. The CAL is also called the efficient frontier of risky assets in the absence of a risk-free asset.d. The slope of the CAL equals the increase in the expected return of the complete portfolio per unit of additional standard deviation.

Which of the following statements are (is) correct with respect to the Capital Allocation Line (CAL): O a. graphical depiction showing possible combinations of risk free and risky assets O b. assumes a linear / ship between risk and return O c. Slope = Sharpe Ratio O d. Helps investors determine an asset mix most suitable for them • e. All of the above

Which statement is not true regarding the market portfolio? a. It lies on the efficient frontier.b. It is the tangency point between the capital market line and the efficient frontierc. It includes all publicly traded financial assets.d. It is a equally-weighted portfolio.

Which of the following statements is FALSE?Question 7Answera.We must discount the cash flows from stock based on the equity cost of capital for the stock.b.The capital gain is the difference between the expected sale price and the purchase price of the stock.c.We divide the capital gain by the expected future stock price to calculate the capital gain yield.d.The firm might pay out cash to its shareholders in the form of a dividend.

Which of the following statements is FALSE? O a.The capital gain is the difference between the expected sale price and the purchase price of the stock O b. The sum of the dividend yield and the capital gain yield is called the total return of the stock O c. Future dividend payments and stock prices are not known with certainty, rather these values are based on the investor'sexpectations at the time the stock is purchased. We divide the capital gain by the expected future stock price to calculate the capital gain yield.O d.

Which of the following statements is FALSE?A.Franco Modigliani and Merton Miller argued that with perfect capital markets, the total value of a firm should not depend on its capital structure.B.It is inappropriate to discount the cash flows of levered equity at the same discount rate that we use for unlevered equity.C.Leverage decreases the risk of the equity of a firm.D.Because the cash flows of the debt and equity sum to the cash flows of the project, by the Law of One Price the combined values of debt and equity must be equal to the cash flows of the project.