Exam 13: Return, Risk, and the Security Market Line

Which one of the following measures the amount of systematic risk present in a particular risky asset relative to the systematic risk present in an average risky asset?

Which one of the following is a positively sloped linear function that is created when expected returns are graphed against security betas?

Your portfolio has a beta of 1.12.The portfolio consists of 40 percent U.S.Treasury bills,30 percent stock A,and 30 percent stock B.Stock A has a risk-level equivalent to that of the overall market.What is the beta of stock B?

Which one of the following is least apt to reduce the unsystematic risk of a portfolio?

You would like to combine a risky stock with a beta of 1.68 with U.S.Treasury bills in such a way that the risk level of the portfolio is equivalent to the risk level of the overall market.What percentage of the portfolio should be invested in the risky stock?

Which one of the following is an example of unsystematic risk?

Which of the following are examples of diversifiable risk? I.earthquake damages an entire town II.federal government imposes a $100 fee on all business entities III.employment taxes increase nationally IV.toymakers are required to improve their safety standards

The expected rate of return on a stock portfolio is a weighted average where the weights are based on the:

A stock with an actual return that lies above the security market line has: