Exam 7: Risk,return,and the Capital Asset Pricing Model

A fund that attempts to mimic the S&P 500

A particular asset has a beta of 1.2 and an expected return of 10%.The expected return on the market portfolio is 13% and the risk-free is 5%.The stock is

According to the CAPM (capital asset pricing model),the security market line is a straight line.The slope of this line should be equal to

NARRBEGIN: Exhibit 7-5 Exhibit 7-5 -Given Exhibit 7-5,what is the weight of Security 3?

A particular stock has an expected return of 11%.If the expected risk premium on the market portfolio is 8%,and the risk-free rate is 5%,what's the stock's CAPM beta?

The risk-free rate is 5% and the expected return on the market portfolio is 13%.A stock has a beta of 0,what is its expected return?

You have the following data on the securities of three firms: If the risk-free rate last year was 3%,and the return on the market was 11%,which firm had the best performance on a risk-adjusted basis?

Modern financial markets are:

According to the CAPM (capital asset pricing model),the security market line is a straight line.The intercept of this line should be equal to

The expected possible outcomes for Roxy Stock are below; what is the expected standard deviation of Roxy Stock?

The expected outcomes of Emma Stock are below; what is the expected variance of Emma Stock?

Investors can eliminate what type of risk by diversifying?

The slope of the security market line is:

Suppose David can borrow and lend at the risk-free rate of 5%.Which of the following three risky portfolios should he hold in combination with a position in the risk-free asset?

A portfolio has 40% invested in Asset 1,50% invested in Asset 2 and 10% invested in Asset 3.Asset 1 has a beta of 1.2,Asset 2 has a beta of 0.8 and Asset 3 has a beta of 1.8,what's the beta of the portfolio?

A fund based on the efficient market hypothesis is most likely

The hypothesis that states that it is nearly impossible to predict exactly when stocks will do well relative to bonds is known as the:

The expected outcomes for Louis Stock are below; what is the expected variance of Louis Stock?

NARRBEGIN: Exhibit 7-2 Exhibit 7-2 -Given Exhibit 7-2,what is the expected return?

Suppose that over the last 20 years,company XYZ has averaged a return of 13%.Over the same period,the Treasury bond rate has averaged 4%.The current estimate of the Treasury bond rate is 6.5%.Using the historical approach,what is the estimate of XYZ's expected return.