Direct Controls Are Generally Much More Costly Than Emissions Taxes

question 36

Multiple Choice

Direct controls are generally much more costly than emissions taxes because

• A)under direct controls emissions cutbacks are usually not apportioned among the firms on the basis of their ability to reduce pollution cheaply and efficiently.
• B)emissions tax per unit of output is higher than the per-unit direct control program cost.
• C)government cannot legally levy emissions taxes that are as high.
• D)firms disregard emissions taxes.

Apply CAPM to calculate the expected return of individual securities based on their beta, the risk-free rate, and the market rate of return.

Analyze the effects of changes in market conditions (such as changes in market rate of return and risk premium) on the expected return of securities.

Calculate portfolio beta and understand how to adjust a portfolio to achieve a desired beta.

Understand and calculate the variance and standard deviation of returns for both individual securities and portfolios.