In the context of the Capital Asset Pricing Model (CAPM), the Securities Market Line (SML) is…a.Select one:the line that describes the expected return-beta relationship of well-diversified portfolios only.b.the line that is tangent to the Efficient Frontier.c.the Capital Allocation Line with the highest slope.d.None of the options provided.e.the line that represents the expected return-beta relationship of any security.With regards to the discounted cash flow valuation methods,…Select one:a.the Free Cash Flow to Firm (FCFF) model uses a different discount rate than that used in the FCFE model.b.the Free Cash Flow to Equity (FCFE) model uses a different discount rate than that used in the DDM model.c.the Dividend Discount Model (DDM) is the best valuation method for venture capitalists to pick investee firms.d.All of the options provided.You wish to earn a return of 16% p.a. on each of two industry peers, Coles (ASX ticker: COL) and Woolworths (ASX ticker: WOW). Each of the stocks is expected to pay a dividend of $4 per share in the upcoming year. The expected annual growth rate of dividends is 4% for stock COL and 6% for stock WOW. The intrinsic value of stock COL…Select one:a.is smaller than the intrinsic value of WOW.b.is greater than or equal to the intrinsic value of WOW.c.is greater than the intrinsic value of WOW.d.None of the options provided.?.is equal to the intrinsic value of WOW.?usinessFinanceFINANCE 111
