$\begin{array}{llcc} \text {Expected return on the market } &13\% \\ \text { Standard deviation of the market } &21\%\\ \text { Risk-free rate} &5.5\%\\ \text { Correlation coefficient between }&\\ \text { Stock A and the market } & 0.65 \\ \text { Stock B and the market } & 0.28 \\ \text { Standard deviation of Stock A } & 64 \% \\ \text { Standard deviation of Stock B } & 53 \% \end{array}$ -What is the expected return of Stock B?

A) 9.24% B) 9.87% C) 10.83% D) 10.24% E) 11.23% A) 9.24% B) 9.87% C) 10.83% D) 10.24% E) 11.23%

Exam 12: Return, Risk and Security Management

The expected return of the market is 12 percent, and the risk-free rate is 4.5 percent. Stock K has a beta of 1.2 and an expected return of 14.2 percent. Stock L has a beta of 0.85 and an expected return of 10.3 percent. From this information, Stock K is and Stock L is _.

(Multiple Choice)

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(28)

Question 61

Fama and French's research indicate that which of the following factors should be considered to understand the expected return for an asset. I) market capitalization II) beta III) book to market ratio IV) earnings growth

(Multiple Choice)

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(41)

Question 62

The _______ risk principle states that the reward on an asset is based on the amount of market risk of the asset.

(Multiple Choice)

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Question 63

You own a portfolio with Stocks A and B. The betas of the stocks are 0.9 and 1.1, respectively. You sell a portion of your position in Stock A and short sell Stock C with a beta of 1.3.

(Multiple Choice)

4.8/5

(48)

Question 64

The ABC Inc. has just announced that its quarterly earnings will be $0.20 less than the prior quarter. This news will cause the stock price to

(Multiple Choice)

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Question 65

Expected return on the market 13\% Standard deviation of the market 21\% Risk-free rate 5.5\% Correlation coefficient between Stock A and the market 0.65 Stock B and the market 0.28 Standard deviation of Stock A 64\% Standard deviation of Stock B 53\% -What is the expected return of Stock B?

(Multiple Choice)

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(34)

Question 66

Which of the following statements is false?

(Multiple Choice)

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Question 67

The market risk premium is 7.5 percent and the risk-free rate is 4.5 percent. What is the beta of a stock with an expected return of 10.8 percent?

(Multiple Choice)

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(39)

Question 68

A stock has an expected return of 13.6 percent and a beta of 1.10. If the risk-free rate is 5.4 percent, what is the expected return of the market?

(Multiple Choice)

4.7/5

(40)

Question 69

Which of the following is true for unsystematic risk?

(Multiple Choice)

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Question 70

An efficient portfolio is a portfolio that does which one of the following?

(Multiple Choice)

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Question 71

"Discounting" an announcement into a stock price means:

(Multiple Choice)

4.8/5

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Question 72

The beta of the risk-free asset is __________.

(Multiple Choice)

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Question 73

In the empirical testing of the CAPM, what are the concerns? Why?

(Essay)

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Question 74

The Fama-French three-factor model is based on

(Multiple Choice)

4.8/5

(32)

Question 75

Stock X has a reward-to-risk ratio of 6.2, and Stock Y has a reward-to-risk ratio is 8.1. You know:

(Multiple Choice)

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Question 76

Stock J has a beta of 1.25 and an expected return of 13 percent. Stock S has a beta of 0.90 and an expected return of 11 percent. What does the risk-free rate have to be for the stocks to be priced correctly relative to each other?

(Multiple Choice)

4.8/5

(34)

Question 77

The return on the market above the risk-free rate of interest is known as the market _______. That is, E(R_m) - R_F.

(Multiple Choice)

4.8/5

(41)

Question 78

Systematic risk is defined as risk that

(Multiple Choice)

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Question 79

An under-priced asset plots:

(Multiple Choice)

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Question 80

Showing 61 - 80 of 106

The expected return of the market is 12 percent, and the risk-free rate is 4.5 percent. Stock K has a beta of 1.2 and an expected return of 14.2 percent. Stock L has a beta of 0.85 and an expected return of 10.3 percent. From this information, Stock K is and Stock L is _.

Fama and French's research indicate that which of the following factors should be considered to understand the expected return for an asset. I) market capitalization II) beta III) book to market ratio IV) earnings growth

The _______ risk principle states that the reward on an asset is based on the amount of market risk of the asset.

You own a portfolio with Stocks A and B. The betas of the stocks are 0.9 and 1.1, respectively. You sell a portion of your position in Stock A and short sell Stock C with a beta of 1.3.

The ABC Inc. has just announced that its quarterly earnings will be $0.20 less than the prior quarter. This news will cause the stock price to

Expected return on the market 13\% Standard deviation of the market 21\% Risk-free rate 5.5\% Correlation coefficient between Stock A and the market 0.65 Stock B and the market 0.28 Standard deviation of Stock A 64\% Standard deviation of Stock B 53\% -What is the expected return of Stock B?

Which of the following statements is false?

The market risk premium is 7.5 percent and the risk-free rate is 4.5 percent. What is the beta of a stock with an expected return of 10.8 percent?

A stock has an expected return of 13.6 percent and a beta of 1.10. If the risk-free rate is 5.4 percent, what is the expected return of the market?

Which of the following is true for unsystematic risk?

An efficient portfolio is a portfolio that does which one of the following?

"Discounting" an announcement into a stock price means:

The beta of the risk-free asset is __________.

In the empirical testing of the CAPM, what are the concerns? Why?

The Fama-French three-factor model is based on

Stock X has a reward-to-risk ratio of 6.2, and Stock Y has a reward-to-risk ratio is 8.1. You know:

Stock J has a beta of 1.25 and an expected return of 13 percent. Stock S has a beta of 0.90 and an expected return of 11 percent. What does the risk-free rate have to be for the stocks to be priced correctly relative to each other?

The return on the market above the risk-free rate of interest is known as the market _______. That is, E(R_m) - R_F.

Systematic risk is defined as risk that

An under-priced asset plots:

A Brief History of Risk and Return

Diversification and Risky Asset Allocation

The Investment Process

Overview of Security Types

Mutual Funds

The Stock Market

Common Stock Valuation

Stock Price Behaviour and Market Efficiency

Behavioural Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Performance Evaluation and Risk Management

Options

Option Valuation

Futures Contracts

Projecting Cash Flow and Earnings

Corporate Bonds

Government Bonds and Mortgaged-Backed Securities

International Portfolio Investment

Filters

Exam 12: Return, Risk and Security Management

The expected return of the market is 12 percent, and the risk-free rate is 4.5 percent. Stock K has a beta of 1.2 and an expected return of 14.2 percent. Stock L has a beta of 0.85 and an expected return of 10.3 percent. From this information, Stock K is ______ and Stock L is _______.

Fama and French's research indicate that which of the following factors should be considered to understand the expected return for an asset. I) market capitalization II) beta III) book to market ratio IV) earnings growth

The _______ risk principle states that the reward on an asset is based on the amount of market risk of the asset.

You own a portfolio with Stocks A and B. The betas of the stocks are 0.9 and 1.1, respectively. You sell a portion of your position in Stock A and short sell Stock C with a beta of 1.3.

The ABC Inc. has just announced that its quarterly earnings will be $0.20 less than the prior quarter. This news will cause the stock price to

Expected return on the market 13\% Standard deviation of the market 21\% Risk-free rate 5.5\% Correlation coefficient between Stock A and the market 0.65 Stock B and the market 0.28 Standard deviation of Stock A 64\% Standard deviation of Stock B 53\% -What is the expected return of Stock B?

Which of the following statements is false?

The market risk premium is 7.5 percent and the risk-free rate is 4.5 percent. What is the beta of a stock with an expected return of 10.8 percent?

A stock has an expected return of 13.6 percent and a beta of 1.10. If the risk-free rate is 5.4 percent, what is the expected return of the market?

Which of the following is true for unsystematic risk?

An efficient portfolio is a portfolio that does which one of the following?

"Discounting" an announcement into a stock price means:

The beta of the risk-free asset is __________.

In the empirical testing of the CAPM, what are the concerns? Why?

The Fama-French three-factor model is based on

Stock X has a reward-to-risk ratio of 6.2, and Stock Y has a reward-to-risk ratio is 8.1. You know:

Stock J has a beta of 1.25 and an expected return of 13 percent. Stock S has a beta of 0.90 and an expected return of 11 percent. What does the risk-free rate have to be for the stocks to be priced correctly relative to each other?

The return on the market above the risk-free rate of interest is known as the market _______. That is, E(Rm) - RF.

Systematic risk is defined as risk that

An under-priced asset plots:

A Brief History of Risk and Return

Diversification and Risky Asset Allocation

The Investment Process

Overview of Security Types

Mutual Funds

The Stock Market

Common Stock Valuation

Stock Price Behaviour and Market Efficiency

Behavioural Finance and the Psychology of Investing

Interest Rates

Bond Prices and Yields

Performance Evaluation and Risk Management

Options

Option Valuation

Futures Contracts

Projecting Cash Flow and Earnings

Corporate Bonds

Government Bonds and Mortgaged-Backed Securities

International Portfolio Investment

Filters

The expected return of the market is 12 percent, and the risk-free rate is 4.5 percent. Stock K has a beta of 1.2 and an expected return of 14.2 percent. Stock L has a beta of 0.85 and an expected return of 10.3 percent. From this information, Stock K is and Stock L is _.

The return on the market above the risk-free rate of interest is known as the market _______. That is, E(R_m) - R_F.