If Bank 1 Is Acquired by Bank 3, What Is

question 80

Multiple Choice

If Bank 1 is acquired by Bank 3, what is the impact on the market's HHI? $$\begin{array} { | c | r | } \hline \text { Bank } & \text { Asset Size } \\\hline 1 & \text { \$100 million } \\\hline 2 & \text { \$200 million } \\\hline 3 & \text { \$500 million } \\\hline\end{array}$$

• A)An increase in the HHI of 1600.
• B)An increase in the HHI of 624.
• C)An increase in the HHI of 1563.
• D)A decrease in the HHI of 222.
• E)A decrease in the HHI of 360.

Identify the role of systematic and unsystematic risk in CAPM.

Determine the expected rate of return on securities using CAPM.

Explain the significance of beta in measuring a security's market risk.

Interpret the Security Market Line (SML) and its implications for asset pricing.

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Definitions:

Cash Discount

A reduction in the invoice price offered by sellers to buyers for prompt payment of their bill, aimed at encouraging early payment.

Commercial Paper

An unsecured, short-term debt instrument issued by corporations, typically used for financing inventory and accounts receivable.

Coupon Payments

Periodic interest payments made by a bond issuer to its bondholders, usually on an annual or semi-annual basis.

Sold at a Discount

refers to selling something for less than its usual or advertised price, often to encourage quick sales or because the item is slightly damaged or outdated.