1. If the CAPM is used to estimate the cost of equity capital, the expected excess market return is equal to the:
A. difference between the return on the market and the risk-free rate.
B. beta times the market risk premium.
C. market rate of return.
D. beta times the risk-free rate.
E. return on the stock minus the risk-free rate.
2. You borrow $20,000 to be repaid in 12 monthly installments of$1,833.60. The annual interest rate is closest to:
a. 2 %
b. 12 %
c. 18 %
d. 24%
3. Barbara needs an individual disability income policy. Her agent should recommend all of the following policy features except:
A. Waiver of premium
B. No elimination period
C. Cost of living benefit rider
D. Age 65 benefit period