Exam 12: Behavioral Finance and Technical Analysis

The risk-free rate is 4 percent.The expected market rate of return is 12 percent.If you expect stock X with a beta of 1.0 to offer a rate of return of 10 percent,you should

The risk-free rate and the expected market rate of return are 0.06 and 0.12,respectively.According to the capital asset pricing model (CAPM),the expected rate of return on security X with a beta of 1.2 is equal to.

The risk-free rate and the expected market rate of return are 0.056 and 0.125,respectively.According to the capital asset pricing model (CAPM),the expected rate of return on a security with a beta of 1.25 is equal to

Which statement is true regarding the market portfolio?

The amount that an investor allocates to the market portfolio is negatively related to I.The expected return on the market portfolio. II.The investor's risk aversion coefficient. III.The risk-free rate of return. IV.The variance of the market portfolio

The risk-free rate is 4 percent.The expected market rate of return is 11 percent.If you expect CAT with a beta of 1.0 to offer a rate of return of 10 percent,you should

Discuss the assumptions of the capital asset pricing model,and how these assumptions relate to the "real world" investment decision process.

The capital asset pricing model assumes

The risk-free rate and the expected market rate of return are 0.056 and 0.125,respectively.According to the capital asset pricing model (CAPM),the expected rate of return on a security with a beta of 1.25 is equal to

According to the Capital Asset Pricing Model (CAPM)a well diversified portfolio's rate of return is a function of

In the context of the Capital Asset Pricing Model (CAPM)the relevant measure of risk is

Studies of liquidity spreads in security markets have shown that

The risk premium on the market portfolio will be proportional to

In the context of the Capital Asset Pricing Model (CAPM)the relevant measure of risk is

List and discuss two of the assumptions of the CAPM.

You invest 50% of your money in security A with a beta of 1.6 and the rest of your money in security B with a beta of 0.7.The beta of the resulting portfolio is

You invest 55% of your money in security A with a beta of 1.4 and the rest of your money in security B with a beta of 0.9.The beta of the resulting portfolio is

The capital asset pricing model assumes

Empirical results regarding betas estimated from historical data indicate that

If investors do not know their investment horizons for certain