Question 1

Use the following three statements to answer this question:

Accepted Answer

A)  I is incorrect, II is correct, III is correct. 
B)  I is correct, II is incorrect, III is correct. 
C)  I and II are incorrect, III is incorrect. 
D)  I and II are correct, III is incorrect.
I.When  
And we know the return on Security A,we can predict the return on Security B with certainty.
II.Generally,security returns display positive correlations with one another but they are less than one,because all securities tend not to follow the movements of the overall market.
III.Any value of correlation less than +1 provides a possibility of diversification. 
A)  I is incorrect, II is correct, III is correct. 
B)  I is correct, II is incorrect, III is correct. 
C)  I and II are incorrect, III is incorrect. 
D)  I and II are correct, III is incorrect.
I.When  
And we know the return on Security A,we can predict the return on Security B with certainty.
II.Generally,security returns display positive correlations with one another but they are less than one,because all securities tend not to follow the movements of the overall market.
III.Any value of correlation less than +1 provides a possibility of diversification.

Question 2

What is the expected return for a portfolio that has $800 invested in Stock A and $1,200 invested in Stock B,if the expected returns on Stock A and Stock B are 10% and 18%,respectively?

Accepted Answer

A)  14.00% 
B)  14.80% 
C)  13.20% 
D)  12.60% 
A)  14.00% 
B)  14.80% 
C)  13.20% 
D)  12.60%

Question 3

Use the following two statements to answer this question:

Accepted Answer

A)  I and II are correct. 
B)  I and II are incorrect. 
C)  I is correct, II is incorrect. 
D)  I is incorrect, II is correct.
i.Ex post returns are expected returns while ex ante returns are future returns.
i.Risk is the possibility of incurring harm. 
A)  I and II are correct. 
B)  I and II are incorrect. 
C)  I is correct, II is incorrect. 
D)  I is incorrect, II is correct.
i.Ex post returns are expected returns while ex ante returns are future returns.
i.Risk is the possibility of incurring harm.

Question 4

Which one of the following is NOT an example of systematic risk?

Accepted Answer

A)  Jump in oil prices to new highs 
B)  Central bank decides to increase interest rates 
C)  Recall of a newly released product 
D)  New regulations on industry subsidies 
A)  Jump in oil prices to new highs 
B)  Central bank decides to increase interest rates 
C)  Recall of a newly released product 
D)  New regulations on industry subsidies

Use the following three statements to answer this question:

What is the expected return for a portfolio that has $800 invested in Stock A and $1,200 invested in Stock B,if the expected returns on Stock A and Stock B are 10% and 18%,respectively?

Use the following two statements to answer this question:

Which one of the following is NOT an example of systematic risk?

An Introduction to Finance

Business Corporatefinance

Financial Statements

Financial Statement Analysis and Forecasting

Time Value of Money

Bond Valuation and Interest Rates

Equity Valuation

The Capital Asset Pricing Model Capm

Market Efficiency

Forwards,futures,and Swaps

Options

Capital Budgeting, risk Considerations, and Other Special Issues

Cash Flow Estimation and Capital Budgeting Decisions

Mergers and Acquisitions

Leasing

Investment Banking and Securities Law

Debt Instruments

Equity and Hybrid Instruments

Cost of Capital

Capital Structure Decisions

Dividend Policy

Working Capital Management: General Issues

Working Capital Management: Current Assets and Current Liabilities

Filters

Exam 8: Risk, return, and Portfolio Theory

Use the following three statements to answer this question:

What is the expected return for a portfolio that has $800 invested in Stock A and $1,200 invested in Stock B,if the expected returns on Stock A and Stock B are 10% and 18%,respectively?

Use the following two statements to answer this question:

Which one of the following is NOT an example of systematic risk?

An Introduction to Finance

Business Corporatefinance

Financial Statements

Financial Statement Analysis and Forecasting

Time Value of Money

Bond Valuation and Interest Rates

Equity Valuation

The Capital Asset Pricing Model Capm

Market Efficiency

Forwards,futures,and Swaps

Options

Capital Budgeting, risk Considerations, and Other Special Issues

Cash Flow Estimation and Capital Budgeting Decisions

Mergers and Acquisitions

Leasing

Investment Banking and Securities Law

Debt Instruments

Equity and Hybrid Instruments

Cost of Capital

Capital Structure Decisions

Dividend Policy

Working Capital Management: General Issues

Working Capital Management: Current Assets and Current Liabilities

Filters