Responses need to be 3-4 sentences at a minimum even for yes/no or True/false questions. They require explanation.
The standard deviation of the earnings on State Bank of India shares is 40%, while for Siemens it is only 28%. However, State Bank of India has a β of 1.13 and Siemens of 1.7. Explain how this is possible.
Is the β of a diversified conglomerate close to 1? Why?
The greater the number of shares in a portfolio, the less the marginal contribution to diversification of an additional security will be. True or false?
How many costs of capital are there in a company that has diversified into different (business) sectors but not geographic areas? What about if it has done so within each of the company’s divisions?
Must the values of financial assets fluctuate in opposite directions in order to reduce risk? Why?
Is the value of a floating-rate bond always equal to 100%? Why?
Can a company that invests in projects on which the returns are lower than its cost of capital continue to obtain resources through cash flow? Through debt? Through capital increases?
Explain why an investor would be prepared to require a return lower than the risk-free rate for a share with a negative β
A company that is close to insolvency carries out a capital increase. Is this a signal? Why? What criteria can you identify as being necessary for a decision to be described as a signal?
Why does the cost of capital constitute a direct link between return on capital expenditure and the returns required by capital investors?
What can you say about a share for which the standard deviation of the return is high, and the β is low?
Explain in a few lines why diversifiable risk cannot be remunerated on markets in equilibrium.
