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Questions and Answers
Which type of risk is associated with the market as a whole?
Which type of risk is associated with the market as a whole?
- Non-systematic risk
- Idiosyncratic risk
- Total risk
- Systematic risk (correct)
According to the Capital Market Theory, combining a risk-free asset with a risky asset results in higher risk-adjusted returns because the risk-free asset has what correlation with the risky asset?
According to the Capital Market Theory, combining a risk-free asset with a risky asset results in higher risk-adjusted returns because the risk-free asset has what correlation with the risky asset?
- Negative correlation
- Positive correlation
- Perfect correlation
- Zero correlation (correct)
What is the name of the model that is used to compute the expected return of an asset based on its beta?
What is the name of the model that is used to compute the expected return of an asset based on its beta?
- Leveraged Portfolios
- Market Model
- Capital Allocation Line (CAL)
- Capital Asset Pricing Model (CAPM) (correct)
The Capital Asset Pricing Model (CAPM) is a part of which topic in managing investment portfolios?
The Capital Asset Pricing Model (CAPM) is a part of which topic in managing investment portfolios?
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What is the name of the line that represents the relationship between expected return and risk for efficient portfolios?
What is the name of the line that represents the relationship between expected return and risk for efficient portfolios?
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