A) the ability to diversify risk. B) how an asset covaries with the market. C) the actual return on an asset. D) the standard of the assets' returns. E) All of the above. A) the ability to diversify risk. B) how an asset covaries with the market. C) the actual return on an asset. D) the standard of the assets' returns. E) All of the above.

GenLabs has been a hot share the last few years,but is risky.The expected returns for GenLabs are highly dependent on the state of the economy as follows: $\begin{array}{|l|l|l|} \hline \text { State of Economy } & \text { Probability } & \text { GenLabs Retums } \\ \hline \text { Depression } & .05 & -50 \% \\ \hline \text { Recession } & .10 & -15 \% \\ \hline \text { MildSlowdown } & .20 & 5 \% \\ \hline \text { Normal } & .30 & 15 \% \\ \hline \text { Broad Expansion } & .20 & 25 \% \\ \hline \text { StrongExpansion } & .15 & 40 \%\\ \hline \end{array}$ The variance of GenLabs returns is

A) .0207 B) .0428 C) .0643 D) .0733 E) None of the above. A) .0207 B) .0428 C) .0643 D) .0733 E) None of the above.

GenLabs has been a hot share the last few years,but is risky.The expected returns for GenLabs are highly dependent on the state of the economy as follows: $\begin{array}{|l|l|l|} \hline \text { State of Economy } & \text { Probability } & \text { GenLabs Returns } \\ \hline \text { Depression } & .05 & -50 \% \\ \hline \text { Recession } & .10 & -15 \% \\ \hline \text { MildSlowdown } & .20 & 5 \% \\ \hline \text { Normal } & .30 & 15 \% \\ \hline \text { Broad Expansion } & .20 & 25 \% \\ \hline \text { StrongExpansion } & .15 & 40 \%\\ \hline \end{array}$ The expected return on GenLabs is:

A) 3.3% B) 8.5% C) 12.5% D) 20.5% E) None of the above. A) 3.3% B) 8.5% C) 12.5% D) 20.5% E) None of the above.

A) can be effectively eliminated through portfolio diversification. B) is compensated for by the risk premium. C) is measured by beta. D) cannot be avoided if you wish to participate in the financial markets. E) is related to the overall economy. A) can be effectively eliminated through portfolio diversification. B) is compensated for by the risk premium. C) is measured by beta. D) cannot be avoided if you wish to participate in the financial markets. E) is related to the overall economy.

Exam 10: Return and Risk: The Capital Asset Pricing Model Capm

A portfolio contains two assets.The first asset comprises 40% of the portfolio and has a beta of 1.2.The other asset has a beta of 1.5.The portfolio beta is

(Multiple Choice)

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Question 41

The _____ tells us that the expected return on a risky asset depends only on that asset's nondiversifiable risk.

(Multiple Choice)

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Question 42

The Capital Market Line is the pricing relationship between:

(Multiple Choice)

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Question 43

Which one of the following statements is correct concerning the standard deviation of a portfolio?

(Multiple Choice)

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Question 44

If the economy booms,RTF AB equity is expected to return 10%.If the economy goes into a recessionary period,then RTF is expected to only return 4%.The probability of a boom is 60% while the probability of a recession is 40%.What is the variance of the returns on RTF?

(Multiple Choice)

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Question 45

Zelo NV share has a beta of 1.23.The risk-free rate of return is 4.5% and the market rate of return is 10%.What is the amount of the risk premium on Zelo shares?

(Multiple Choice)

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Question 46

Beta measures:

(Multiple Choice)

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Question 47

The beta of a security is calculated by:

(Multiple Choice)

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Question 48

In previous chapters,it was stated that financial managers should act to maximize shareholder wealth.Why are the efficient markets hypothesis (EMH),the CAPM,and the SML so important in the accomplishment of this objective?

(Essay)

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Question 49

The equity of Big Joe's has a beta a 1.14 and an expected return of 11.6%.The risk-free rate of return is 4%.What is the expected return on the market?

(Multiple Choice)

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Question 50

GenLabs has been a hot share the last few years,but is risky.The expected returns for GenLabs are highly dependent on the state of the economy as follows: State of Economy Probability GenLabs Retums Depression .05 -50\% Recession .10 -15\% MildSlowdown .20 5\% Normal .30 15\% Broad Expansion .20 25\% StrongExpansion .15 40\% The variance of GenLabs returns is

(Multiple Choice)

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Question 51

For a highly diversified equally weighted portfolio with a large number of securities,the portfolio variance is:

(Multiple Choice)

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Question 52

The portfolio expected return considers which of the following factors? I.the amount of money currently invested in each individual security. II.various levels of economic activity. III.the performance of each share given various economic scenarios. IV.the probability of various states of the economy.

(Multiple Choice)

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Question 53

A portfolio is entirely invested into Buzz's Bauxite Boring Equity,which is expected to return 16%,and Zum's bonds,which are expected to return 8%.60% of the funds are invested in Buzz's and the rest in Zum's.What is the expected return on the portfolio?

(Multiple Choice)

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Question 54

What is the standard deviation of a portfolio that is invested 40% in share Q and 60% in share R? $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad$ Returns if $\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad$ State Occurs State of Economy Probability of State of Economy ShareQ Share R Boom 25\% 18\% 9\% Normal 75\% 9\% 5\%

(Multiple Choice)

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Question 55

GenLabs has been a hot share the last few years,but is risky.The expected returns for GenLabs are highly dependent on the state of the economy as follows: State of Economy Probability GenLabs Returns Depression .05 -50\% Recession .10 -15\% MildSlowdown .20 5\% Normal .30 15\% Broad Expansion .20 25\% StrongExpansion .15 40\% The expected return on GenLabs is:

(Multiple Choice)

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Question 56

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:

(Multiple Choice)

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Question 57

The slope of an asset's security market line is the:

(Multiple Choice)

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Question 58

A portfolio is made up of 75% of share 1,and 25% of share 2.Share 1 has a variance of .08,and share 2 has a variance of .035.The covariance between the shares is -.001.Calculate both the variance and the standard deviation of the portfolio.

(Essay)

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Question 59

Unsystematic risk:

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Question 60

Showing 41 - 60 of 117

Exam 10: Return and Risk: The Capital Asset Pricing Model Capm

A portfolio contains two assets.The first asset comprises 40% of the portfolio and has a beta of 1.2.The other asset has a beta of 1.5.The portfolio beta is

The _____ tells us that the expected return on a risky asset depends only on that asset's nondiversifiable risk.

The Capital Market Line is the pricing relationship between:

Which one of the following statements is correct concerning the standard deviation of a portfolio?

If the economy booms,RTF AB equity is expected to return 10%.If the economy goes into a recessionary period,then RTF is expected to only return 4%.The probability of a boom is 60% while the probability of a recession is 40%.What is the variance of the returns on RTF?

Zelo NV share has a beta of 1.23.The risk-free rate of return is 4.5% and the market rate of return is 10%.What is the amount of the risk premium on Zelo shares?

Beta measures:

The beta of a security is calculated by:

In previous chapters,it was stated that financial managers should act to maximize shareholder wealth.Why are the efficient markets hypothesis (EMH),the CAPM,and the SML so important in the accomplishment of this objective?

The equity of Big Joe's has a beta a 1.14 and an expected return of 11.6%.The risk-free rate of return is 4%.What is the expected return on the market?

For a highly diversified equally weighted portfolio with a large number of securities,the portfolio variance is:

A portfolio is entirely invested into Buzz's Bauxite Boring Equity,which is expected to return 16%,and Zum's bonds,which are expected to return 8%.60% of the funds are invested in Buzz's and the rest in Zum's.What is the expected return on the portfolio?

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 slope of an asset's security market line is the:

A portfolio is made up of 75% of share 1,and 25% of share 2.Share 1 has a variance of .08,and share 2 has a variance of .035.The covariance between the shares is -.001.Calculate both the variance and the standard deviation of the portfolio.

Unsystematic risk:

Introduction to Corporate Finance

Corporate Governance

Financial Statement Analysis and Long-Term Planning

Discounted Cash Flow Valuation

How to Value Bonds and Shares

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options, and Capital Budgeting

Risk and Return: Lessons From Market History

Factor Models and the Arbitrage Pricing Theory

Risk, cost of Capital, and Capital Budgeting

Corporate Financing Decisions and Efficient Capital Markets

Long-Term Financing: An Introduction

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividend and Other Payouts

Equity Financing

Debt Financing

Leasing and Off-Balance-Sheet Financing

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Financial Risk Management With Derivatives

Short-Term Finance and Planning

Cash Management

Credit Management

Mergers and Acquisitions

Financial Distress

International Corporate Finance

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