Nile Food's stock has a beta of 1.4, while Elba Eateries' stock has a beta of 0.7. Assume that the risk-free rate, rRF, is 5.5% and the market risk premium, (rM − rRF), equals 4%. Which of the following statements is CORRECT?

A-Since Nile's beta is twice that of Elbe's, its required rate of return will also be twice that of Elbe's.
B-If the risk-free rate increases but the market risk premium remains unchanged, the required return will increase for both stocks but the increase will be larger for Nile since it has a higher beta.
C-If the market risk premium increases but the risk-free rate remains unchanged, Nile's required return will increase because it has a beta greater than 1.0 but Elbe's will decline because it has a beta less than 1.0.
D-If the market risk premium decreases but the risk-free rate remains unchanged, Nile's required return will decrease because it has a beta greater than 1.0 and Elbe's will also decrease, and by more than Nile's because it has a beta less than 1.0.
E-If the risk-free rate increases while the market risk premium remains constant, then the required return on an average stock will increase.

Mr. smith recently faced a choice between being (a) an economics profes-sor, which pays $60,000/yr, or (b) a safari leader, which pays $50,000/yr. after careful deliberation, smith took the safari job, but it was a close call. "for a dollar more," he said, "i'd have gone the other way."now smith's brother-in-law approaches him with a business proposition. the terms are as follows: - smith must resign his safari job to work full-time in his brother-in-law's business.- smith must give his brother-in-law an interest-free loan of $100,000, which will be repaid in full if and when smith leaves the business. (smith currently has much more than $100,000 in the the business will pay smith a salary of $70,000/yr. he will receive no other payment from the business. the interest rate is 10 percent per year. apart from salary considerations, smith feels that working in the business would be just as enjoyable as being an economics professor. for simplicity, assume there is no uncertainty regarding either smith's salary in the proposed business or the security of his monetary investment in it. should smith join his brother-in-law and, if so, how small would smith's salary from the business have to be to make it not worthwhile for him to join? if not, how large would smith's salary from the business have to be to make it worthwhile for him to join?

Bakery has bought 250 pounds of muffin dough. they want to make waffles or muffins in half-dozen packs out of it. half a dozen of muffins requires 1 lb of dough and a pack of waffles uses 3/4 lb of dough. it take bakers 6 minutes to make a half-dozen of waffles and 3 minutes to make a half-dozen of muffins. their profit will be $1.50 on each pack of waffles and $2.00 on each pack of muffins. how many of each should they make to maximize profit, if they have just 20 hours to do everything?

True or false: a fitted model with more predictors will necessarily have a lower training set error than a model with fewer predictors.