Question 1

The systematic risk principle states that the expected return on a risky asset depends only on which one of the following?

Accepted Answer

A)   Unique risk
B)   Diversifiable risk
C)   Asset-specific risk
D)   Market risk
E)   Unsystematic riskF) C) and E)
G) B) and D)

Question 2

You would like to invest $18,000 and have a portfolio expected return of 12.3 percent. You are considering two securities, A and B. Stock A has an expected return of 15.6 percent and B has an expected return of 10.3 percent. How much should you invest in stock A if you invest the balance in stock B?

Accepted Answer

A)   $5,807
B)   $6,792
C)   $7,410
D)   $7,936
E)   $8,626F) B) and D)
G) C) and E)

Question 3

Which one of the following is the slope of the security market line?

Accepted Answer

A)   Risk-free rate
B)   Market risk premium
C)   Beta coefficient
D)   Risk premium on an individual asset
E)   Market rate of returnF) D) and E)
G) A) and B)

Question 4

Northern Wear stock has an expected return of 14.6 percent. Given the information below, what is the expected return on this stock if the economy is normal?

Accepted Answer

A)   13 percent
B)   16 percent
C)   18 percent
D)   21 percent
E)   23 percentF) B) and C)
G) A) and B)

Question 5

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?

Accepted Answer

A)   $6,000
B)   $9,000
C)   $12,000
D)   $15,000
E)   $18,000F) A) and D)
G) A) and C)

Question 6

Stock A comprises 28 percent of Susan's portfolio. Which one of the following terms applies to the 28 percent?

Accepted Answer

A)   Portfolio variance
B)   Portfolio standard deviation
C)   Portfolio weight
D)   Portfolio expected return
E)   Portfolio betaF) D) and E)
G) A) and B)

Exam 11: Risk and Return

Which one of the following is the slope of the security market line?

Correct Answer
verified

The systematic risk principle states that the expected return on a risky asset depends only on which one of the following?

Correct Answer
verified

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?

Correct Answer
verified

Stock A comprises 28 percent of Susan's portfolio. Which one of the following terms applies to the 28 percent?

Correct Answer
verified

Northern Wear stock has an expected return of 14.6 percent. Given the information below, what is the expected return on this stock if the economy is normal?

Correct Answer
verified

You would like to invest $18,000 and have a portfolio expected return of 12.3 percent. You are considering two securities, A and B. Stock A has an expected return of 15.6 percent and B has an expected return of 10.3 percent. How much should you invest in stock A if you invest the balance in stock B?

Correct Answer
verified

Exam 11: Risk and Return

Which one of the following is the slope of the security market line?

Correct AnswerverifiedShow Answer

The systematic risk principle states that the expected return on a risky asset depends only on which one of the following?

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Stock A comprises 28 percent of Susan's portfolio. Which one of the following terms applies to the 28 percent?

Correct AnswerverifiedShow Answer

Northern Wear stock has an expected return of 14.6 percent. Given the information below, what is the expected return on this stock if the economy is normal?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified