1. The discount rate that makes the net present value of an investment exactly equal to zero is called the:
external rate of return (ERR).
internal rate of return (IRR).
average accounting return.
profitability index.
2. The CAPM shows that the expected return for a particular asset depends on the pure time value of money, the asset’s beta coefficient, and the:
market risk premium
asset’s expected standard deviation
asset’s historical standard deviation
asset’s unsystematic risk