Chat with AIExam 13: Return, Risk, and the Security Market Line
Exam 1: Introduction to Corporate Finance71 Questions
Exam 2: Financial Statements, Taxes, and Cash Flow81 Questions
Exam 3: Working With Financial Statements96 Questions
Exam 4: Long-Term Financial Planning and Growth80 Questions
Exam 5: Introduction to Valuation: The Time Value of Money68 Questions
Exam 6: Discounted Cash Flow Valuation132 Questions
Exam 7: Interest Rates and Bond Valuation129 Questions
Exam 8: Stock Valuation119 Questions
Exam 9: Net Present Value and Other Investment Criteria115 Questions
Exam 10: Making Capital Investment Decisions108 Questions
Exam 11: Project Analysis and Evaluation106 Questions
Exam 12: Some Lessons From Capital Market History98 Questions
Exam 13: Return, Risk, and the Security Market Line109 Questions
Exam 14: Cost of Capital100 Questions
Exam 15: Raising Capital93 Questions
Exam 16: Financial Leverage and Capital Structure Policy98 Questions
Exam 17: Dividends and Payout Policy103 Questions
Exam 18: Short-Term Finance and Planning109 Questions
Exam 19: Cash and Liquidity Management101 Questions
Exam 20: Credit and Inventory Management97 Questions
Exam 21: International Corporate Finance99 Questions
Exam 22: Behavioral Finance: Implications for Financial Management45 Questions
Exam 23: Enterprise Risk Management68 Questions
Exam 24: Options and Corporate Finance106 Questions
Exam 25: Option Valuation79 Questions
Exam 26: Mergers and Acquisitions89 Questions
Exam 27: Leasing72 Questions
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You recently purchased a stock that is expected to earn 30 percent in a booming economy,9 percent in a normal economy,and lose 33 percent in a recessionary economy.There is a 5 percent probability of a boom and a 75 percent chance of a normal economy.What is your expected rate of return on this stock?
(Multiple Choice)
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(47) You own the following portfolio of stocks.What is the portfolio weight of stock C? 
(Multiple Choice)
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(33) Which one of the following indicates a portfolio is being effectively diversified?
(Multiple Choice)
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(35) What is the standard deviation of the returns on a stock given the following information? 
(Multiple Choice)
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(40) What is the expected return on a portfolio that is equally weighted between stocks K and L given the following information? 
(Multiple Choice)
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(29) What is the variance of the returns on a portfolio comprised of $5,400 of stock G and $6,600 of stock H? 
(Multiple Choice)
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(41) Which one of the following is represented by the slope of the security market line?
(Multiple Choice)
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(40) Total risk is measured by _____ and systematic risk is measured by _____.
(Multiple Choice)
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(27) Which one of the following statements related to unexpected returns is correct?
(Multiple Choice)
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(45) A news flash just appeared that caused about a dozen stocks to suddenly drop in value by about 20 percent.What type of risk does this news flash represent?
(Multiple Choice)
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(43) The _____ of a security divided by the beta of that security is equal to the slope of the security market line if the security is priced fairly.
(Multiple Choice)
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(30) Explain the difference between systematic and unsystematic risk.Also explain why one of these types of risks is rewarded with a risk premium while the other type is not.
(Essay)
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(32) Consider the following information on three stocks: 
A portfolio is invested 35 percent each in Stock A and Stock B and 30 percent in Stock C.What is the expected risk premium on the portfolio if the expected T-bill rate is 3.3 percent?
A portfolio is invested 35 percent each in Stock A and Stock B and 30 percent in Stock C.What is the expected risk premium on the portfolio if the expected T-bill rate is 3.3 percent? (Multiple Choice)
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(42) Which one of the following is an example of systematic risk?
(Multiple Choice)
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(41) Which one of the following stocks is correctly priced if the risk-free rate of return is 3.7 percent and the market risk premium is 8.8 percent? 
(Multiple Choice)
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(37) Which one of the following statements is correct concerning unsystematic risk?
(Multiple Choice)
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(35) Treynor Industries is investing in a new project.The minimum rate of return the firm requires on this project is referred to as the:
(Multiple Choice)
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