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Questions and Answers
The correlation coefficient between the returns on two stocks with different volatility equals zero.
For an equally weighted portfolio of such stocks, the correlation has the implication that:
The correlation coefficient between the returns on two stocks with different volatility equals zero. For an equally weighted portfolio of such stocks, the correlation has the implication that:
- The portfolio variance must equal zero.
- The expected risk premium of the portfolio must equal zero.
- The portfolio has only unsystematic risk.
- None of the above. (correct)
The beta of an individual security is a measure of:
The beta of an individual security is a measure of:
- Firm specific risk of the security.
- Market risk of the security. (correct)
- Risk adjusted return.
- None of the above.
When you increase the number of assets in a portfolio:
When you increase the number of assets in a portfolio:
- The beta of the portfolio always increases.
- The systematic risk of the portfolio always decreases.
- The expected return of the portfolio always increases.
- None of the above. (correct)
The Fama-French-Carhart model assumes that:
The Fama-French-Carhart model assumes that:
The CAPM beta of a stock equals one. This indicates that:
The CAPM beta of a stock equals one. This indicates that:
Which of the following statements about options is correct:
Which of the following statements about options is correct:
An efficient stock market implies that:
An efficient stock market implies that:
Which of the following statements about real options is correct:
Which of the following statements about real options is correct:
The correlation coefficient between the returns on stock A and B equals 0.3. The standard
deviation of the return on stock A and B are 0.25 and 0.35 respectively. The standard deviation of
the return on a portfolio with 50% invested in stock A and 50% invested in stock B is closest to:
The correlation coefficient between the returns on stock A and B equals 0.3. The standard deviation of the return on stock A and B are 0.25 and 0.35 respectively. The standard deviation of the return on a portfolio with 50% invested in stock A and 50% invested in stock B is closest to:
The CAPM assumes that:
The CAPM assumes that:
The beta of a stock in a CAPM regression is 0.75. The risk-free rate of return is 4% and the
expected return on the market portfolio equals 9%. According to the CAPM, the expected return
on this stock is closest to:
The beta of a stock in a CAPM regression is 0.75. The risk-free rate of return is 4% and the expected return on the market portfolio equals 9%. According to the CAPM, the expected return on this stock is closest to:
Diversification implies that:
Diversification implies that:
The alpha of a CAPM regressions measures:
The alpha of a CAPM regressions measures:
When increasing the number of assets in a portfolio:
When increasing the number of assets in a portfolio:
The correlation coefficient between the returns on two stocks equals one. The correlation has the implication that:
The correlation coefficient between the returns on two stocks equals one. The correlation has the implication that:
The CAPM beta of a stock equals zero. This indicates that:
The CAPM beta of a stock equals zero. This indicates that:
Which of the following statements about options is correct:
Which of the following statements about options is correct:
Which of the following statements about real options is correct:
Which of the following statements about real options is correct:
The correlation coefficient between the returns on stock A and B equals 0.5. The standard deviation of the return on stock A and B are 0.20 and 0.35 respectively. The standard deviation of the return on a portfolio with 25% invested in stock A and 75% invested in stock B is closet to:
(0,250,2)^2 + (0,750,35)^2 + 20,50,250,750,2*0,35
The correlation coefficient between the returns on stock A and B equals 0.5. The standard deviation of the return on stock A and B are 0.20 and 0.35 respectively. The standard deviation of the return on a portfolio with 25% invested in stock A and 75% invested in stock B is closet to: (0,250,2)^2 + (0,750,35)^2 + 20,50,250,750,2*0,35
An efficient stock market implies that:
An efficient stock market implies that:
The beta of a stock in a CAPM regression is 1.5. The risk-free rate of return is 3% and the expected return on the market portfolio equals 8%. According to the CAPM, the expected return on this stock is closest to:
The beta of a stock in a CAPM regression is 1.5. The risk-free rate of return is 3% and the expected return on the market portfolio equals 8%. According to the CAPM, the expected return on this stock is closest to:
The CAPM assumes that:
The CAPM assumes that:
Diversification implies that:
Diversification implies that:
