1. The risk that oil prices rise

2. A negative weight percentage of a portfolio indicates:

3. Entrepreneur starting a biotech company. If research is successful the technology can be sold for $30 million. If unsuccessful, it will be worth nothing. To fund your research you need to raise $2 million. Investors are willing to provide you with $2 million for 50% of the unlevered equity What is the market value of the firm without leverage? Now suppose the firm borrowed $1 million before asking you for money. (Under M&M the firm is still worth overall $4 million) What percent of the firm's equity will you need to sell to raise the additional $1 million you need (now you will raise $1 million debt and $1 million equity rather than $2 million equity)

4. WACC

5. What is the advantage of portfolios?

6. Your company has preferred stock that has an annual dividend of $3. If the current price is $25, what is the required Return of Preferred Stock?

7. in the money

8. CAPM is the same as the _________________

9. Expected Return = Risk-free rate + Risk Premium for _________ Risk ONLY

10. Unlevered equity

11. Suppose an Unlevered firm is worth $100 million. If the company decides to raise $30 million in debt (uses proceeds to repurchase equity). What is the new Enterprise Value? What is the new equity value ('unlevered equity')?

12. If you invest in multiple stocks, you ________________ some of the risk with offsetting results

13. Value of the unlevered firm ($4 million) =

14. The risk that the founder and CEO leaves the company

15. What are the components of a bond return (YTM)?

16. Total risk is measured by ______________ and systematic risk is measured by ___________________

17. Volatility _________ as the number of stocks in the equally weighted portfolio grows

18. _____________ measures value creation

19. Levered

20. SML Overvalued

21. What is the equity cost of capital?

22. The __________ _________ should reflect the risk of the project

23. Can the intrinsic value be negative?

24. Reduced ________________ of the components of a portfolio will ______________ the volatility of the portfolio

25. If you are choosing among 2 investments with the same risk choose the one with the _______________ expected return