Question 6 – 4
If investors’ aversion to risk increased, would the risk premium on a high-beta stock increase by more or less than that on a low-beta stock? Explain.
Question 6 – 5
If a company’s beta were to double, would its expected return double?
Question 7 – 3
A bond that pays interest forever and has no maturity date is a perpetual bond, also called a perpetuity or a consol. In what respect is a perpetual bond similar to (1) a no-growth common stock and (2) a share of preferred stock?
* Response to questions do not need to be long but at least 75 to 150 words each question, and APA format is not required.