Finance Question: Which of the following statements is TRUE?

Finance Question: Which of the following statements is TRUE?

Finance
Question:
Question 135 pts Which of the following statements is TRUE? A change in a security’s beta coefficient affects the require rate of return for the security but will not affect the price of the security. As the risk aversion of average investors increase, the market risk premium will generally decrease. None of the statements is true. A change in expected inflation may affect both the required rate of return on a security and the price of the security. The market risk premium is not affected by the degree of aversion that the average investors have to risk. When using the capital asset pricking model (CAPM) to determine a stock’s appropriate risk premium, compare the stock’s price with several comparable stock and compute an average. multiply the market risk premium by the stock’s beta. None of the answers shown. average the inflation premium for the past five years. multiply the stock’s price by the inflation premium. Longstead Corporation has a 2.0 beta. The risk-free rate is 10 percent. The required rate of return on an average stock is 15 percent. Now the expected rate of inflation built into the risk-free rate declines by 3 percentage points. The real risk-free rate remains constant. The required rate of return on the market declines to 11 percent, and the beta remains constant. When all of these changes are made, what is the required rate of return on Longstead’s stock? 16% 18% 15% None of those shown 23%

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Finance
Question:
The parent of Nester Co. ( a U.S. firm) has no international business but plans to invest $20 million in a business in Switzerland. Because the operating costs of this business are very low, Nester Co. expects this business to generate large cash flows in Swiss francs that will be remitted to the parent each year. Nester will finance half of this project with debt. It has these choices for financing the project. – obtain half of the funds needed from parent equity and the other half by borrowing dollars, – obtain half of the funds needed from parent equity and the other half by borrowing Swiss francs, or – obtain half of the funds that are needed from the parent equity and obtain the remainder by borrowing an equal amount of dollars and Swiss francs. The interest rate on dollars is the same as the interest rate on Swiss francs Which choice will result in the most exchange rate exposure? Which choice will result in the least exchange rate exposure? If the Swiss franc were expected t appreciate over time, which financing choice would result in the highest NPV?