1. What is the present value of the? following?
a. A ?$ 700 perpetuity discounted back to the present at 7 percent
b. A ?$6,000 perpetuity discounted back to the present at 11 percent
c. A ?$ 160 perpetuity discounted back to the present at 8 percent
d. A ?$50 perpetuity discounted back to the present at 4 percent
2. Which of the following statements regarding investment risk is correct?
1. Beta is a measure of systematic, non-diversifiable risk
2. Rational investors will form portfolios and eliminate systematic risk
3. Rational investors will form portfolios and eliminate unsystematic risk
4. Systematic risk is the relevant risk for a well diversified portfolio
5. Beta capture all the risk inherent in an individual security
a. 1 and 5
b. 2 and 5
c. 1,3, and 4
d. 2,3, and 4