Questions and Answers
Which of the following is correct?
It is possible that an asset has a negative beta, and its return would be less than the riskfree rate.
. You own a stock portfolio invested 10 percent in Stock Q , 35 percent in Stock R , 20 percent in Stock S , and 35 percent in Stock T . The betas for these four stocks are 0.75, 1.90, 1.38, and 1.16, respectively. What is the portfolio beta?
1.42
If a security has a beta of 1.4, then as the market return increased by 10%, the security:
Increases by 14%
A stock has an expected return of 13.1 percent, a beta of 1.28, and the expected return on the market is 11 percent. What must the risk-free rate be?
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Which of the following is NOT an assumption of CAPM?
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Which of the following is TRUE?
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You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.65 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?
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