ABC Energy company leased the mineral rights to drill for oil and gas on 10,000 acres for $500,000. Now the firm is trying to determine whether the cost to drill the well is justified given the poor results on nearby acreage. For financial decision-making, the $500,000 should be: ANSWER considered an erosion cost and ignored. included in the analysis. considered a sunk cost and ignored. I DON'T KNOW YET

Stock a has a beta of 1.2 and a standard deviation of 20%. stock b has a beta of 0.8 and a standard deviation of 25%. portfolio p has $200,000 consisting of $100,000 invested in stock a and $100,000 in stock b. which of the following statements is correct? (assume that the stocks are in equilibrium.) (a) stock b has a higher required rate of return than stock a. (b) portfolio p has a standard deviation of 22.5%. (c) portfolio p has a beta equal to 1.0. (d) more information is needed to determine the portfolio's beta. (e) stock a's returns are less highly correlated with the returns on most other stocks than are b's returns.