A) the ability to diversify risk. B) how an asset covaries with the market. C) the actual return on an asset. D) the standard deviation of the assets' returns. E) All of the above. A) the ability to diversify risk. B) how an asset covaries with the market. C) the actual return on an asset. D) the standard deviation of the assets' returns. E) All of the above.

Exam 11: Return and Risk: the Capital Asset Pricing Model

Zoom,Inc.stock has a beta of 1.5.The risk-free rate of return is 3.7% and the market rate of return is 9.5%.What is the amount of the risk premium on Zoom stock?

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Question 1

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As we add more securities to a portfolio,the ____ will decrease:

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Question 2

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In the first chapter,it was stated that financial managers should act to maximize shareholder wealth.Why are the efficient markets hypothesis (EMH),the CAPM,and the SML so important in the accomplishment of this objective?

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Question 3

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In simple terms,one could say that maximizing shareholder wealth by maximizing the current share price is a reasonable objective if and only if we have some assurance that observed prices are meaningful;i.e. ,that they reflect the value of the firm.This is a major implication of the EMH.Further,if we are to be able to assess the wealth effects of future decisions on security and firm values,we must have a valuation model whose parameters can be shown to be affected by those decisions.Finally,any valuation model we employ will require us to quantify return and risk.

The risk-free rate of return is 4% and the market risk premium is 8%.What is the expected rate of return on a stock with a beta of 1.28?

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Question 4

The dominant portfolio with the lowest possible risk is:

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Question 5

According to the CAPM:

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Question 6

The correlation between two stocks:

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Question 7

The primary purpose of portfolio diversification is to:

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Question 8

Your portfolio is comprised of 30% of stock X,50% of stock Y,and 20% of stock Z.Stock X has a beta of .64,stock Y has a beta of 1.48,and stock Z has a beta of 1.04.What is the beta of your portfolio?

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Question 9

Which one of the following statements is correct concerning the expected rate of return on an individual stock given various states of the economy?

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Question 10

What is the beta of a portfolio comprised of the following securities?

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Question 11

When a security is added to a portfolio the appropriate return and risk contributions are:

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Question 12

Beta measures:

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Question 13

The slope of an asset's security market line is the:

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Question 14

A stock with an actual return that lies above the security market line:

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Question 15

Which one of the following would indicate a portfolio is being effectively diversified?

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Question 16

Zelo,Inc.stock has a beta of 1.23.The risk-free rate of return is 4.5% and the market rate of return is 10%.What is the amount of the risk premium on Zelo stock?

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Question 17

Which one of the following is an example of a nondiversifiable risk?

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Question 18

If a stock portfolio is well diversified,then the portfolio variance:

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Question 19

The systematic risk of the market is measured by:

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Question 20

Showing 1 - 20 of 125

Zoom,Inc.stock has a beta of 1.5.The risk-free rate of return is 3.7% and the market rate of return is 9.5%.What is the amount of the risk premium on Zoom stock?

As we add more securities to a portfolio,the ____ will decrease:

In the first chapter,it was stated that financial managers should act to maximize shareholder wealth.Why are the efficient markets hypothesis (EMH),the CAPM,and the SML so important in the accomplishment of this objective?

The risk-free rate of return is 4% and the market risk premium is 8%.What is the expected rate of return on a stock with a beta of 1.28?

The dominant portfolio with the lowest possible risk is:

According to the CAPM:

The correlation between two stocks:

The primary purpose of portfolio diversification is to:

Your portfolio is comprised of 30% of stock X,50% of stock Y,and 20% of stock Z.Stock X has a beta of .64,stock Y has a beta of 1.48,and stock Z has a beta of 1.04.What is the beta of your portfolio?

Which one of the following statements is correct concerning the expected rate of return on an individual stock given various states of the economy?

What is the beta of a portfolio comprised of the following securities?

When a security is added to a portfolio the appropriate return and risk contributions are:

Beta measures:

The slope of an asset's security market line is the:

A stock with an actual return that lies above the security market line:

Which one of the following would indicate a portfolio is being effectively diversified?

Zelo,Inc.stock has a beta of 1.23.The risk-free rate of return is 4.5% and the market rate of return is 10%.What is the amount of the risk premium on Zelo stock?

Which one of the following is an example of a nondiversifiable risk?

If a stock portfolio is well diversified,then the portfolio variance:

The systematic risk of the market is measured by:

Introduction to Corporate Finance

Financial Statements and Cash Flow

Financial Statements Analysis and Long-Term Planning

Net Present Value and Other Investment Rules

Interest Rates and Bond Valuation

Risk and Return: Lessons From Market History

An Alternative View of Risk and Return: the Arbitrage Pricing Theory

Efficient Capital Markets and Behavioral Challenges

Long-Term Financing: an Introduction

Raising Capital

Options and Corporate Finance

Options and Corporate Finance: Extensions and Applications

Warrants and Convertibles

Derivatives and Hedging Risk

International Corporate Finance

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