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- 9. When we use the WACC to assess a project, we assume that the ________ ratio does not change. A. reward to systematic risk B. risk to reward C. debt to equity D. volatility to systematic riskIn generating their forex forecasts, NAB economists would have made a number of assumptions.These may or may not hold. For instance, take the AUD/USD forecast. Outline factors or eventsthat may render the forecasts inaccurate.4. All of the following points are true regarding the key principles of forecasting except: Select one: a. Financial statement forecasts must rely on assumptions that have external validity b. Financial statement forecasts must be internally consistent c. Financial statement forecasts need not be comprehensive d. Forecasts should not manifest wishful thinking
- Q.No.1. What is efficient set? Explain why rational investors will never choose a portfolio below the minimum variance point. Also show that this holds true regardless of whether risk- averse investors would have different attitudes towards risk.Ch. 11. If two returns are positively related to each other, they will have a ________, and if they are negatively related to each other, the ______________. Group of answer choices positive covariance, covariance will be negative negative covariance, covariance will be zero positive covariance, standard deviation will be negative negative covariance, covariance will be positiveExplain why the APV model is suited for situations in which the capitalstructure is changing during the forecast period.
- The expectations gap is:Which one of the following statements is correct? Group of answer choices The lower the average return, the greater the risk premium. The greater the volatility of returns, the greater the risk premium. The lower the volatility of returns, the greater the risk premium. The risk premium is not affected by the volatility of returns. The risk premium is unrelated to the average rate of return.The empirical SML is too flat relative to what CAPM predicts. Researchers have focused on which two possible explanations?. I - Leverage aversion II - Lottery preference III - Myopic loss aversion IV - Risk aversion A. I and II B. I and III C. I and IV D. II and III E. II and IV
- Why would you use mean absolute deviation as opposed to the mean average?3. Describe a specific scenario of how you would use a pro forma financial statement?4. List and describe three time series models, and explain when would you use it? (be specific)Which of the following is true according to the pure expectations theory? Forward rates:a. Exclusively represent expected future short rates.b. Are biased estimates of market expectations.c. Always overestimate future short rates.b. Why do some investors prefer to use Lower Partial Standard Deviations (LPSD) as compared to the standard deviation?