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