1. MSFT 1.1 Boeing 1.02 SBUX .82 MCD .31 Based on the above ticke

1. MSFT 1.1

Boeing 1.02

SBUX .82

MCD .31

Based on the above ticker and betas and the assumption that you own a good diversified portfolio of financial assets decide in the following statement is T or
False

Selling MSFT and using the proceeds to buy shares of SBUX (starbucks) would lower he risk of your portfolio and lower the porfotlios expected return.

True or False

2. Interest rates on 20 year treasury ad corporate bonds are as follows t-bond=7.72% AAA=8.72% A=9.64% BBB=10.18%.

What caused the differene in these rates?

a. Tax effects

b. default risk differences

c. maturity risk differences

d. inflation differences

e. real risk-free rate difference