1. The capital gains yield plus the dividend yield on a security is called the:

[A] geometric return.

[B] total return.

[C] variance of returns.

2. Which one of the following is an example of a nondiversifiable risk?

[A] A poorly managed firm suddenly goes out of business due to lack of sales

[B] A key employee of a firm suddenly resigns and accepts employment with a key competitor

[C] A well respected chairman of the Federal Reserve suddenly resigns

3. Beta values are highly dependent on the covariance of a security with the market.

[A] True

[B] False

4. Insider trading does not offer any advantages if the financial markets are:

[A] inefficient.

[B] semiweak form efficient.

[C] strong form efficient.

5. MM Propositions ignore bankruptcy costs.

[A] True

[B] False