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.

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