Exam 9: Characterizing Risk and Return

Portfolio Return Year to date,Company Y had earned a 10.8 percent return.During the same time period,Company R earned 12.20 percent and Company C earned -1.56 percent.If you have a portfolio made up of 45 percent Y,35 percent R,and 20 percent C,what is your portfolio return?

Consider the following correlations: Given this data,which of the following is most preferable if an investor can only select one pair of companies?

Which of these includes any capital gain (or loss)that occurred as well as any income that you received from a specific investment?

Consider the following annual returns of Estee Lauder and Lowe's Companies: Compute each stock's average return,standard deviation,and coefficient of variation.

Which of the following statements is correct?

Standard Deviation The standard deviation of the past five monthly returns for K and Company are 4.25 percent,4.13 percent,-2.05 percent,3.25 percent,and 7.75 percent.What is the standard deviation?

The total risk of the S&P 500 Index is equal to:

Portfolio Return Year to date,Company Y had earned a 7 percent return.During the same time period,Company R earned 9.25 percent and Company C earned -2.25 percent.If you have a portfolio made up of 35 percent Y,40 percent R,and 25 percent C,what is your portfolio return?

What is the source of firm-specific risk? What is the source of market risk?

Portfolio Weights If you own 1,000 shares of Alaska Corporation at $19.95,250 shares of Best Company at $17.50,and 250 shares of Motor Company at $2.50,what are the portfolio weights of each stock?

Which of the following is defined as the volatility of an investment,which includes firm specific risk as well as market risk?

At the beginning of the month,you owned $15,500 of General Motors,$4,500 of Starbucks,and $9,000 of Nike.The monthly returns for General Motors,Starbucks,and Nike were 7.10 percent,-1.36 percent,and -0.54 percent.What is your portfolio return?

The optimal portfolio for you will be:

Investment Return Noble stock was $60.00 per share at the end of last year.Since then,it paid a $2.00 per share dividend last year.The stock price is currently $58.If you owned 400 shares of Noble,what was your percent return?

Which of these is a measure of risk to reward earned by an investment over a specific period of time?

Which of these is the portion of total risk that is attributable to overall economic factors?

Which of the following are investor diversification problems?

Total Risk Rank the following three stocks by their level of total risk,highest to lowest.Rail Haul has an average return of 10 percent and standard deviation of 15 percent.The average return and standard deviation of Idol Staff are 15 percent and 25 percent; and of Poker-R-Us are 12 percent and 35 percent.

Diversifying Consider the characteristics of the following three stocks: The correlation between T&Company and A&Company is -0.2.The correlation between T&Company and S&Company is -0.21.The correlation between A&Company and S&Company is 0.95.If you can pick only two stocks for your portfolio,which would you pick? Why?

Year-to-date,Oracle had earned a 15.0 percent return.During the same time period,Valero Energy earned -12.96 percent and McDonald's earned 1.80 percent.If you have a portfolio made up of 50 percent Oracle,10 percent Valero Energy,and 40 percent McDonald's,what is your portfolio return?