Exam 13: Managing Your Own Portfolio

Allison's portfolio has an expected return of 14% and a beta of 1.37.Brianna's portfolio has an expected rate of return of 11% and a beta of 1.The risk-free rate is 3%.According to the Treynor measure,

Sharpe's measure is a measure of the risk premium per unit of total risk.

Jessica's portfolio consists of 30% common stock, 40% bonds, 15% foreign securities and 15% short-term securities.This asset allocation would be considered

The maximum capital loss that can be applied to ordinary income for income tax purposes in any one year is $3000.

On February 19, 2016, Angela purchased 100 shares of BRD stock at a total cost of $3,425.She received a total of $250.00 in dividends and sold the stock today, February 22, 2017 for $3,692.Angela has a marginal tax rate of 28%.The tax rate on dividend income and long-term capital gains is 15%.What is Angela's after-tax holding period return on her investment in BRD stock?

Sharpe's measure of portfolio performance compares the risk premium on a portfolio to

Dollar-cost averaging plans and constant-dollar plans are both formula approaches to portfolio management.Briefly explain the two plans.

Under the variable-ratio plan, additional speculative investments are made when the ratio

An investor in the 25% marginal tax bracket purchased a bond for $983, received $85 in interest, and then sold the bond for $955 after holding it for six months.The tax rate for capital gains with holding periods in excess of one year is 15%.What are the pre-tax and post-tax holding period returns?

Ella's portfolio has a beta of 1.34 and a standard deviation of 16.4%.The portfolio has a total return of 14.8%.The market risk premium is 8.5%, while the return on the market portfolio was 12.0%.What is the value of Sharpe's measure for Ella's portfolio?

Marianne is in the 30% marginal tax bracket.For her, a 5% return on a tax-exempt portfolio is equivalent to a 6.5% return on a taxable portfolio.

Returns for periods greater than one year should be measured using the internal rate of return.

Mathew's 401-K plan offers a choice between and S&P 500 Index Fund, a large-cap stock fund, a blue chip stock fund that seeks high dividend income and modest growth, a fund that invests only in investment grade corporate bonds and a fund that that invests only in government bonds.Mathew allocates 20% of his money to each fund.Which of the following statements offers the best critique of Mathew's "1/N" allocation?

Over a period of time if an investment has not met its return objective, it should be sold.

Alex bought 100 shares of CBG corporation at $20 per share.It is now selling at $50 and Alex has placed a stop loss order at $47.50, good til canceled.Which of the following is true?

Warehousing liquidity protects a portion of the portfolio from market fluctuations.

Allison's portfolio has an expected return of 14% and a beta of 1.37.Brianna's portfolio has an expected rate of return of 11% and a beta of 1.The risk-free rate is 3% and the expected rate of return on the market is 12%.According to the Jensen's measure,

Late in the calendar year, Jessica must choose between selling stock that was purchased 2 years ago for $10,000 and has fallen to $7,000 or a different stock that was purchased 1 year ago for $5,000 and has risen to $7,000.If the investor has no other capital gains, which stock should she sell?

The two primary media for warehousing liquidity are

A portfolio has a total return of 14.5%, a beta of 1.54, and a standard deviation of 17.6%.If the risk free rate is 4.5% and the market return is 10.2%, then Treynor's measure of this portfolio's performance is