Which of the following statements is false

Assignment Help Finance Basics
Reference no: EM132185058

1) Which of the following statements is false?

a) Because diversification improves with the number of stocks held in a portfolio, an efficient portfolio should be a large portfolio containing many different stocks.

b) The beta of a security is the sensitivity of the security's return to the return of the overall market.

c) An efficient portfolio cannot be diversified further; that is, there is no way to reduce the risk of the portfolio without lowering its expected return.

d) We call a portfolio that contains only unsystematic risk an efficient portfolio.

e) None of the above

2) If the market portfolio has an expected return of 0.12 and a standard deviation of 0.40, and the risk-free rate is 0.04, what is the slope of the security market line?

a) 0.08

b) 0.20

c) 0.04

d) 0.12

e) None of the above

3) A particular asset has a beta of 1 and an expected return of 10%. The expected return on the market portfolio is 13% and the risk-free is 5%. Which of the following statement is correct?

a) This asset lies on the security market line.

b) This asset lies above the security market line.

c) This asset lies below the security market line.

d) Cannot tell from the given information.

e) None of the above

4) Which of the following statements is false?

a) Firm-specific news is good or bad news about the company itself.

b) Firms are affected by both systematic and firm-specific risk.

c) When firms carry both types of risk, only the firm-specific risk will be diversified when we combine many firms' stocks into a portfolio.

d) The risk premium for a stock is affected by its idiosyncratic risk.

e) None of the above

Reference no: EM132185058

Estimate of the stock current price

The company's stock has a beta of 1.8, the risk-free rate is 3.5%, and the market risk premium is 6%. What is your estimate of the stock's current price? Round your answer t

Determine the net proceeds of each bond

Determine the net proceeds of each bond and the cost of the bonds for each company in terms of yield. The bond yield in the table is the market yield before the commission i

Determine the relevant cash flows

The directors of Manuff (Steel) Ltd are considering closing one of the business's factories. There has been a reduction in the demand for the products made at the factory in

What is the firm current receivables balance

what would be the firm's new receivables balance if Milwaukee Surgical toughened up on its collection policy with the result that all nondiscount customers paid on the 30th

Determine taxable income and their tax liability

Carrie and Stephen have gross salary and wages of $76,000 in 2016 and file a joint return. They have $27,150 of total allowable deductions and a $240 child care credit. Dete

Complete the balance sheet and income statement

Required: Using the Data above, complete the following on the templates provided: Part 1: Complete the Balance Sheet and Income Statement for XYZ Corporation. Part 2: Calcul

Individual or component costs of capital

Your firm is considering a new investment proposal and would like to calculate its weighted average cost of capital. To help in this, compute the cost of capital for the fir

Explain what cagr is

The first step to informed financial statement analysis is a careful evaluation of the quality of the reported accounting numbers. No tool of financial statement analysis is

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd