Exam 8: Risk and Return

Adam wants to determine the required return on a stock portfolio with a beta coefficient of 0.5. Assuming the risk-free rate of 6 percent and the market return of 12 percent, compute the required rate of return.

Table 8.3 Consider the following two securities X and Y. -Using the data from Table 8.3, what is the systematic risk for a portfolio with two-thirds of the funds invested in X and one-third invested in Y?

An efficient portfolio is a portfolio that maximizes return for a given level of risk or minimizes risk for a given level of return.

Table 8.2 You are going to invest $20,000 in a portfolio consisting of assets X, Y, and Z, as follows: -If you expect the market to increase which of the following portfolios should you purchase?

In the capital asset pricing model, the beta coefficient is a measure of

Investment A guarantees its holder $100 return. Investment B earns $0 or $200 with equal chances over the same period. Both investments have equal risk.

Unsystematic risk is not relevant, because

Table 8.1 -The portfolio with a standard deviation of zero ________. (See Table 8.1)

The beta of a portfolio is

Last year Mike bought 100 shares of Dallas Corporation common stock for $53 per share. During the year he received dividends of $1.45 per share. The stock is currently selling for $60 per share. What rate of return did Mike earn over the year?