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Portfolio diversification eliminates

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Reference no: EM13839712

Question 1: Suppose the real rate is 2.98% and the inflation rate is 3.31%. Solve for the nominal rate. Use the Fisher Effect formula.

Question 2: What is the beta of the following portfolio?

  • 1.08
  • 1.14
  • 1.17
  • 1.21
  • 1.23

Question3: What is the beta of the following portfolio?

  • 0.98
  • 1.02
  • 1.11
  • 1.14
  • 1.20

Question 4: Portfolio diversification eliminates which one of the following?

  • Total investment risk
  • Portfolio risk premium
  • Market risk
  • Unsystematic risk
  • Reward for bearing risk

Question 5: The systematic risk is same as:

  • Unique risk
  • Diversifiable risk
  • Asset-specific risk
  • Market risk
  • Unsystematic risk

Question 6: Standard deviation measures _____ risk while beta measures _____ risk.

  • systematic; unsystematic
  • unsystematic; systematic
  • total; unsystematic
  • total; systematic
  • asset-specific; market

Question 7: You own a portfolio of two stocks, A and B. Stock A is valued at $6,540 and has an expected return of 11.2 percent. Stock B has an expected return of 8.1 percent. What is the expected return on the portfolio if the portfolio value is $9,500?

  • 9.58 percent
  • 9.62 percent
  • 9.74 percent
  • 9.97 percent
  • 10.23 percent

Question 8: A $36,000 portfolio is invested in a risk-free security and two stocks. The beta of stock A is 1.29 while the beta of stock B is 0.90. One-half of the portfolio is invested in the risk-free security. How much is invested in stock A if the beta of the portfolio is 0.58?

  • $6,000
  • $9,000
  • $12,000
  • $15,000
  • $18,000

Question 9: The stock of Billingsley United has a beta of 0.92. The market risk premium is 8.4 percent and the risk-free rate is 3.2 percent. What is the expected return on this stock?

  • 8.87 percent
  • 9.69 percent
  • 10.93 percent
  • 11.52 percent
  • 12.01 percent

Question 10: Suppose a stock had an initial price of $51.82 per share, paid a dividend of $5 per share during the year, and had an ending share price of $87.91. What are the percentage returns?

Question 11: Suppose a stock had an initial price of $69.44 per share, paid a dividend of $8.8 per share during the year, and had an ending share price of $97.46. What are the percentage returns?

Question 12: A portfolio is invested 46.5% in Stock A, 24.3% in Stock B, and the remainder in Stock C. The expected returns are 15.5%, 21.7%, and 20.7% respectively. What is the portfolio's expected returns?

Question 13:  Calculate the expected returns of your portfolio

Stock

Invest

Exp Ret

A

$246

 8.9%

B

$861

 14.3%

C

$1,416

 25.5%

Question 14: Suppose a stock had an initial price of $93.51 per share, paid a dividend of $5.8 per share during the year, and had an ending share price of $100.77. What are the percentage returns if you own 25 shares?

Question 15: Suppose a stock had an initial price of $87.39 per share, paid a dividend of $6.2 per share during the year, and had an ending share price of $89.38. If you own 296 shares, what are the dollar returns?

Question 16: You own a portfolio invested 10.01% in Stock A, 12.65% in Stock B, 13.78% in Stock C, and the remainder in Stock D. The beta of these four stocks are 1.14, 1.15, 0.99, and 0.73. What is the portfolio beta?

Question 17: You own a portfolio invested 16.52% in Stock A, 17.65% in Stock B, 26.85% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.68, 1.49, 0.3, and 1.43. What is the portfolio beta?

Question 18: Suppose the returns for Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%.
Compute the standard deviation of the returns.

Question 19: Suppose a stock had an initial price of $72.88 per share, paid a dividend of $4.7 per share during the year, and had an ending share price of $106.67. What are the dollar returns?

Question 20: You have observed the following returns on ABC's stocks over the last five years:

2.5%, 9%, -4.9%, 13.6%, -2.3%

What is the arithmetic average returns on the stock over this five-year period.

Question 21: Based on the following information, calculate the expected returns:

 

Prob

Return

Recession

 30%

 33.6%

Boom

 70%

 18.2%

Question 22: Calculate the expected returns of your portfolio

Stock

Invest

Exp Ret

A

$220

 3.9%

B

$879

 12.1%

C

$212

 25.1%

Question 23: Semi-strong-form efficient markets are not weak-form efficient.

  • True
  • False

Reference no: EM13839712

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