1. Behavioral finance supports the:

A. replacement of cash dividends with stock dividends.

B. simultaneous payment of cash dividends along with stock repurchases.

C. payment of dividends rather than stock repurchases.

D. movement to end cash dividends and just have investors buy and sell shares to meet their cash needs.

E. increased use of stock splits rather than the distribution of cash in any form.

2. Assume the single-factor APT model applies and a portfolio exists such that 65 percent of the funds are invested in risky Security Q and the rest in the risk-free asset. Security Q has a beta of 1.5. The portfolio has a beta of:

1.500.

.925.

.650.

.975.

1.000.