Which of the following statements is false? Systematic risk is a market-wide source of risk and...

Which of the following statements is false?

Systematic risk is a market-wide source of risk and is non-diversifiable.

The beta estimate of the market portfolio is one.

The yield to maturity is less than the coupon rate of a premium bond.

Assuming no IRR problems, if IRR > cost of capital, the NPV estimate is negative.

The reinvestment rate of the MIRR is the cost of capital.

Solutions

Expert Solution

Answer: Assuming no IRR problems, if IRR > cost of capital, the NPV estimate is negative.

IRR is the discount rate at which the NPV of given cash flows equal to zero.

When IRR > Discount rate, NPV is positive.

When IRR < DIscount rate, NPV is negative.

jeff jeffy answered 1 year ago

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