Exam 12: Financial Return and Risk Concepts

If the expected return on Stock 1 is 6%, and the expected return on Stock 2 is 20%, the expected return on a two-asset portfolio that holds 10% of its funds in Stock 1 and 90% in Stock 2 is:

Which of the following statements is most correct?

The variance or standard deviation measures the risk per unit of return.

When we speak of ex-ante returns, we are referring to historical information or data.

As defined in accordance with efficient markets notions, a weak-form efficient market would be a market in which asset prices reflect all:

Assume the probability of a pessimistic, most likely and optimistic state of nature is .25, .45 and .30, and the returns associated with those states of nature are 10%, 12%, and 16% for asset X.Based on this information, the expected return and standard deviation of return are:

The risk cause by changes in inflation that affect revenues, expenses and profitability is called:

A market system that allows for quick execution of customers' trades is said to be informationally efficient.

If the market rate of return is 12%, and the beta on Consolidated Edison is .8, the return on Con Ed is:

Which of the following statements is most correct?

Although gold is a risky investment by itself, including gold in a stock portfolio can make the portfolio less risky.

If the expected returns for Stock A are 3% and this year's returns are 3%, next year's returns would be

Which of the following statements is most correct?

A strong-form efficient market is one in which prices reflect all public knowledge, including past and current information.

Which of the following statements is false?

Between 1928 and 2008, the average annual return on common stocks averaged _____%, while the average annual return on Treasury bonds averaged _____%.

If the expected return is 10%, the standard deviation is 3%, about 68% of the time returns will be expected to fall between 10% and 13%.

A weak-form efficient market is one in which prices reflect all public and private knowledge, including past and current information.

The Security Market Line describes the relationship between the:

A (n) ________ portfolio maximizes return for a given level of risk, or minimizes risk for a given level of return. Same as 86 with "none of the above" answer