Exam 11: Return and Risk: the Capital Asset Pricing Model Capm

Your portfolio has a beta of 1.18. The portfolio consists of 15% U.S. Treasury bills,30% in stock A,and 55% in stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B?

What is the standard deviation of a portfolio which is invested 20% in stock A,30% in stock B and 50% in stock C?

The variance of Stock A is .005,the variance of the market is .008 and the covariance between the two is .0026. What is the correlation coefficient?

The expected return on HiLo stock is 13.69% while the expected return on the market is 11.5%. The beta of HiLo is 1.3. What is the risk-free rate of return?

The separation principle states that an investor will:

The amount of systematic risk present in a particular risky asset,relative to the systematic risk present in an average risky asset,is called the particular asset's:

The beta of a security is calculated by:

The variance of Stock A is .004,the variance of the market is .007 and the covariance between the two is .0026. What is the correlation coefficient?

The risk premium for an individual security is computed by:

If the covariance of stock 1 with stock 2 is - .0065,then what is the covariance of stock 2 with stock 1?

The Capital Market Line is the pricing relationship between:

What is the standard deviation of a portfolio that is invested 40% in stock Q and 60% in stock R?

The market risk premium is computed by:

When a security is added to a portfolio the appropriate return and risk contributions are:

The primary purpose of portfolio diversification is to:

Risk that affects at most a small number of assets is called _____ risk.

The dominant portfolio with the lowest possible risk is:

Diversification can effectively reduce risk. Once a portfolio is diversified the type of risk remaining is:

Explain in words what beta is and why it is important.

Your portfolio has a beta of 1.18. The portfolio consists of 25% U.S. Treasury bills,40% in stock A,and 35% in stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B?