FIN 571 – Corporate Finance Questions 4

Answer the 8 questions below, each question must be a minimum of 150-200 words. Must be in APA format, please identify the questions on paper. Cannot accept more than 5% plagiarism, it will be submitted to TurnItIn.

Must be answered in your own words, NO cut and pasted phrases or paragraphs — you can include the URL address so we can click and go to the site, but do not copy and paste (even with references and citations). This way we can avoid plagiarism as well as copyright issues.

BOOK: Ross, S., Westerfield, R., Jaffe, J. & Jordan, B. (2016). Corporate finance (11th edition). New York, N.Y. McGraw-Hill Education.

Ch. 10: Risks and Return

  1. Explain the difference between average stock returns and risk-free returns.
  2. Explain how the Sharpe Ratio is used to manage risk.

Ch. 11: Return and Risk — Capital Asset Pricing Model

  1. Describe how variance and standard deviation are used to measure the variability of individual stocks.
  2. Explain how an investor chooses the best portfolio of stock to hold.

Ch. 13: Risk, Cost of Capital, and Valuation

  1. Explain how cyclicality of revenues and operating leverage help determine beta.
  2. Describe the dividend discount model (DDM) approach and how is it different than CAPM.

Ch. 25: Derivatives and Hedging Risk

  1. What derivatives are and how are they used to manage risk.
  2. Distinguish between forward contracts and future contracts.

***Review the above requirements, please follow and meet. Any questions, let me know.

Thank you!

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