Solution for Principles of Corporate Finance 7E CH8精品分析.docVIP

CHAPTER 8 Risk and Return Answers to Practice Questions 1. a. False – investors demand higher expected rates of return on stocks with more nondiversifiable risk. False – a security with a beta of zero will offer the risk-free rate of return. False – the beta will be: (1/3)?(0) + (2/3)?(1) = 0.67 True. True. In the following solution, security one is Coca-Cola and security two is Reebok. Then: r1 = 0.10 ?1 = 0.315 r2 = 0.20 ?2 = 0.585 Further, we know that for a two-security portfolio: rp = x1r1 + x2r2 ?p2 = x12?12 + 2x1x2?1?2?12 + x22?22 Therefore, we have the following results: x