Reference no: EM131325800
Question 1. According to the text, a risk-averse investor _____.
demands a premium for assuming risk
will only participate in low-risk or risk-free investments
is one of a small minority in the United States
More than one of the above
Question 2. Under Markowitz's theory, the ideal portfolio for an investor is represented by _____.
the point of tangency between the efficient frontier and the investor's indifference curve
the highest possible indifference curve
the highest possible point on the efficient frontier
None of the above
Question 3. Systematic risk is rewarded with a premium in the marketplace because _____.
risk is particular to the stock or industry
it represents a random occurrence which could not have been foreseen
it is associated with market movements that cannot be eliminated through diversification
None of the above
Question 4. Which of the following are assumptions of the capital asset pricing model?
Funds can be borrowed or lent in unlimited quantities at a risk-free rate.
The objective of all investors is to maximize their expected utility over the same one-period timeframe, using the same basis for evaluating investments.
There are no taxes or transaction costs associated with any investment.
All of the above
Question 5. A good way to minimize risk and receive an optimum return on your portfolio is _____.
through diversification
to buy only risk-free securities
through blue-chip stock purchases only
through junk-bonds
Question 6. Assume a portfolio has the possibility of returning 3%, 6%, 11%, or 16%, with the likelihood of 20%, 30%, 25%, and 25%, respectively. The expected value of the portfolio is _____.
8.75%
9.0%
9.15%
9.51%
Question 7. If the market rate of return is 10% and the beta on a particular stock is 1.00, the return on the stock will be _____.
greater than 10%
10%
less than 10%
dependent on some other factor
Question 8. For two investments with a correlation coefficient (rij) greater than +1, the portfolio standard deviation will be _____ the weighted average of the individual investments' standard deviation.
more than
less than
equal to
zero compared to
Question 9. The capital asset pricing model (CAPM) takes off where the _____ concluded.
market line
capital market line
efficient frontier and Markowitz portfolio theory
arbitrage pricing theory
Question 10. Using the formula for the security market line (Formula 21-7), if the risk-free rate (RF) is 6%, the market rate of return (KM) is 12%, and the beta (bi) is 1.2, compute the anticipated return for stock i (Ki).
20.4%
16.33%
13.64%
13.2%
Distinguish between a type i and a type ii error
: Explain the difference between rejecting and failing to reject the null hypothesis. In which case does a researcher conclude that the independent variable has an effect on the dependent variable?
|
Charles river at dover in 2016
: a.) Explain the graph of water discharge vs. time (hydrograph) of the Charles River at Dover in 2016. b.) Explain the graph of water discharge vs. time (hydrograph) of Town Brook in Quincy in 2016.
|
Determine the outcome from the hedge
: On June 17 of a particular year, an American watch dealer decided to import 100,000 Swiss watches.-
|
Determine the outcome of a futures hedge
: Determine the outcome of a futures hedge if on February 28 the spot rate was $0.7207 and the futures rate was $0.7220.
|
Which are assumptions of the capital asset pricing model
: Which of the following are assumptions of the capital asset pricing model? If the market rate of return is 10% and the beta on a particular stock is 1.00, the return on the stock will be _____.
|
Game theory of money and banking
: A person is a Vice-President of a Bank, serving as the head of Commercial Lending. They receive a substantial bonus based on the volume and profitability of their department. The department both makes loans and collects the loans. Answer the fo..
|
Discuss hits and misses in aviation security policy
: Research and develop that discusses hits and misses in aviation security policy. Include in your discussion the following topics:What aspects of aviation security should be addressed in terms of strengthening them? Where do you see weaknesses?
|
Describe how people acquire and change values
: Write a 700- to 1,050-word reflection paper in which you address the following concepts: Identify your core values. Describe how people acquire and change values. Explain what values do for and to us
|
Different examples of economies in the world
: Although there are many different examples of economies in the world, all of them demonstrate one or more of the four basic types of market structure. For this assignment, in your own words,
|