Question text 5Marks The market is expected to generate a 11% return and the risk free rate is 4%. A portfolio manager has 80% of her capital allocated to stock A with a beta of 0.9, which generated a total return of 12%. 20% of her capital is allocated to stock B with a beta of 1.3, which generated a total return of 13%. Select the correct answers for the following:Expected return of A: Answer 3[select: , 10.3%, 11.5%, 8.88%, 9.75%, 9.20%]Expected return of B: Answer 4[select: , 13.10%, 12.65%, 8.92%, 9.27%, 11.71%]Expected return of portfolio: Answer 5[select: , 10.86%, 11.55%, 7.72%, 9.45%, 8.35%]Actual Return: Answer 6[select: , 10.15%, 11.95%, 11.40%, 9.78%, 12.20%]Alpha: Answer 7[select: , 1.34%, 1.74%, -1.07%, 0.83%, None of the above]Notes Report question issue Question 11 Notes多项填空题

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Caribou Gold Mining Corporation is expected to pay a dividend of $4 in the upcoming year. Dividends are expected to decline at the rate of 3% per year. The risk-free rate of return is 5%, and the expected return on the market portfolio is 13%. The stock of Caribou Gold Mining Corporation has a beta of 0.5. Using the CAPM, the return you should require on the stock is __________ blank .

If all investors become more risk averse, the SML will __________ and stock prices will __________.[Fill in the blank]

Question text 5Marks Instruction: Provide your response to this question on the e-Assessment platform (file uploading is NOT allowed). Choose the correct answers from the drop-down list. Required: a. The figure below shows the relationship between a stock’s beta and its expected return, represented by an upward-sloping straight line known as the Security Market Line (SML). This figure demonstrates the concept of Answer 1[select: , Capital Budgeting, Return Smoothing Process, Capital Asset Pricing Model (CAPM)]. It illustrates that as beta increases, the expected return Answer 2[select: , increases, decreases, remains constant], reflecting higher exposure to Answer 3[select: , unsystematic risk, systematic risk, total risk]. This implies that investors are compensated only for bearing Answer 4[select: , unsystematic risk, systematic risk, firm-specific risk], since Answer 5[select: , systematic risk can be eliminated, unsystematic risk can be diversified away, total risk is constant across assets]. The slope of the line is determined by Answer 6[select: , the risk premium of the stock, the market risk premium, the risk-free rate]. [3 marks] b. Different transactions that a company makes can affect cash and net working capital. If the company makes a sale of inventory for cash at cost, cash will Answer 7[select: , not change, decrease, increase], and net working capital will Answer 8[select: , not change, increase, decrease]. If the company refinances (or replaces) $1,000,000 worth of short-term debt with four years of maturity of debt, cash will Answer 9[select: , increase, not change, decrease], and net working capital will Answer 10[select: , not change, increase, decrease]. [2 marks] Notes Report question issue Question 11 Notes

Question text 5Marks Instruction: Provide your response to this question on the e-Assessment platform (file uploading is NOT allowed). Choose the correct answers from the drop-down list. Required: a. The figure below shows the relationship between a stock’s beta and its expected return, represented by an upward-sloping straight line known as the Security Market Line (SML). This figure demonstrates the concept of Answer 1[select: , Return Smoothing Process, Capital Budgeting, Capital Asset Pricing Model (CAPM)]. It illustrates that as beta increases, the expected return Answer 2[select: , decreases, remains constant, increases], reflecting higher exposure to Answer 3[select: , systematic risk, unsystematic risk, total risk]. This implies that investors are compensated only for bearing Answer 4[select: , firm-specific risk, systematic risk, unsystematic risk], since Answer 5[select: , total risk is constant across assets, unsystematic risk can be diversified away, systematic risk can be eliminated]. The slope of the line is determined by Answer 6[select: , the risk premium of the stock, the risk-free rate, the market risk premium]. [3 marks] b. Different transactions that a company makes can affect cash and net working capital. If the company makes a sale of inventory for cash at cost, cash will Answer 7[select: , increase, decrease, not change], and net working capital will Answer 8[select: , increase, decrease, not change]. If the company refinances (or replaces) $1,000,000 worth of short-term debt with four years of maturity of debt, cash will Answer 9[select: , not change, decrease, increase], and net working capital will Answer 10[select: , not change, decrease, increase]. [2 marks] Notes Report question issue Question 11 Notes

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