Systemic risks associated with stock price fluctuations are measured with beta. Why is beta an important technical indicator of systemic risks and how is it obtained?
What will be an ideal response?
A beta value equal to 1.0 means that the specific stock will match market movements, a beta less than 1.0 indicates that the stock is less volatile than the market, and a beta greater than 1.0 indicates that the stock has greater variance than the market. Thus, stocks with large beta values are riskier than those with lower beta values. Beta values can be calculated by developing a regression model of a particular stock's returns (the dependent variable) against the average market returns (the independent variable).
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If a project has an internal rate of return of 12% and a negative net present value, which of the following statements is true regarding the discount rate used for the net present value computation?
A) The discount rate must have been greater than 12%. B) The discount rate must have been less than 12%. C) The discount rate must have been equal to 12%. D) The discount rate must have been 0%.
Which of the following is not true regarding host government attitudes toward direct foreign investment (DFI)? a. Host governments may offer incentives to MNCs in the form of subsidies in certain circumstances. b. Host governments generally perceive DFI as a remedy to eliminate a country's political problems. c. The ability of a host government to attract DFI is dependent on the country's
markets and resources. d. Some types of DFI will be more attractive to some governments than to others. e. All of the above are true.