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BJB,Inc.stock has an expected return of 15.15 percent.The risk-free rate is 3.8 percent and the market risk premium is 8.6 percent.What is the stock's beta?


A) 1.19
B) 1.21
C) 1.32
D) 1.48
E) 1.62

F) B) and C)
G) C) and E)

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You own a portfolio of two stocks,A and B.Stock A is valued at $6,500 and has an expected return of 11.2 percent.Stock B has an expected return of 8.1 percent.What is the expected return on the portfolio if the portfolio value is $9,500?


A) 9.58 percent
B) 9.62 percent
C) 9.74 percent
D) 10.07 percent
E) 10.22 percent

F) B) and C)
G) None of the above

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Mary owns a risky stock and anticipates earning 16.5 percent on her investment in that stock.Which one of the following best describes the 16.5 percent rate?


A) Expected return
B) Real return
C) Market rate
D) Systematic return
E) Risk premium

F) A) and D)
G) B) and D)

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Based on the capital asset pricing model,which one of the following must increase the expected return on an individual security,all else constant?


A) An increase in the risk level of that security as measured by the standard deviation
B) An increase in the risk-free rate given a security beta of 1.42
C) A decrease in the market rate of return given a security beta of 1.13
D) A decrease in the market rate of return given a security beta of .78
E) A decrease in the risk-free rate given a security beta of 1.06

F) B) and E)
G) A) and B)

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Currently,the risk-free rate is 4.0 percent.Stock A has an expected return of 9.6 percent and a beta of 1.08.Stock B has an expected return of 13.5 percent.The stocks have equal reward-to-risk ratios.What is the beta of Stock B?


A) 1.21
B) 1.33
C) 1.52
D) 1.78
E) 1.83

F) All of the above
G) B) and E)

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Given the following information,what is the standard deviation of the returns on a portfolio that is invested 40 percent in Stock A,35 percent in Stock B,and the remainder in Stock C? Given the following information,what is the standard deviation of the returns on a portfolio that is invested 40 percent in Stock A,35 percent in Stock B,and the remainder in Stock C? A) 11.86 percent B) 12.72 percent C) 13.16 percent D) 13.43 percent E) 13.57 percent


A) 11.86 percent
B) 12.72 percent
C) 13.16 percent
D) 13.43 percent
E) 13.57 percent

F) C) and D)
G) B) and D)

Correct Answer

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What is the significance of the slope of the security market line? Should investors prefer a steeper slope or a flatter slope?

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The slope of the security market line is...

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Stock J has a beta of 1.47 and an expected return of 15.8 percent.Stock K has a beta of 1.05 and an expected return of 11.9 percent.What is the risk-free rate if these securities both plot on the security market line?


A) 2.15 percent
B) 3.34 percent
C) 3.88 percent
D) 4.41 percent
E) 4.68 percent

F) A) and B)
G) A) and E)

Correct Answer

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What is the expected return on a security given the following information? What is the expected return on a security given the following information? A) 8.78 percent B) 9.43 percent C) 9.97 percent D) 10.22 percent E) 11.48 percent


A) 8.78 percent
B) 9.43 percent
C) 9.97 percent
D) 10.22 percent
E) 11.48 percent

F) B) and E)
G) C) and D)

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You would like to create a portfolio that is equally invested in a risk-free asset and two stocks.One stock has a beta of 1.15.What does the beta of the second stock have to be if you want the portfolio to be equally as risky as the overall market?


A) 0.78
B) 0.97
C) 1.23
D) 1.55
E) 1.85

F) A) and E)
G) B) and E)

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Given the following information,what is the variance of the returns on this stock? Given the following information,what is the variance of the returns on this stock? A) 0.002453 B) 0.002663 C) 0.002691 D) 0.002759 E) 0.002914


A) 0.002453
B) 0.002663
C) 0.002691
D) 0.002759
E) 0.002914

F) C) and E)
G) C) and D)

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The risk premium for an individual security is based on which one of the following types of risk?


A) Total
B) Surprise
C) Diversifiable
D) Systematic
E) Unsystematic

F) A) and C)
G) A) and E)

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What is the beta of the following portfolio? What is the beta of the following portfolio? A) 0.98 B) 1.02 C) 1.11 D) 1.14 E) 1.20


A) 0.98
B) 1.02
C) 1.11
D) 1.14
E) 1.20

F) C) and D)
G) B) and C)

Correct Answer

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Which one of the following is the best example of systematic risk?


A) Discovery of a major gas field
B) Decrease in textile imports
C) Increase in agricultural exports
D) Decrease in gross domestic product
E) Decrease in management bonuses for banking executives

F) C) and D)
G) A) and B)

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You own a stock that has an expected return of 16.00 percent and a beta of 1.33.The U.S.Treasury bill is yielding 3.65 percent and the inflation rate is 2.95 percent.What is the expected rate of return on the market?


A) 12.07 percent
B) 12.94 percent
C) 13.64 percent
D) 14.09 percent
E) 14.42 percent

F) C) and D)
G) A) and B)

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Stock A comprises 28 percent of Susan's portfolio.Which one of the following terms applies to the 28 percent?


A) Portfolio variance
B) Portfolio standard deviation
C) Portfolio weight
D) Portfolio expected return
E) Portfolio beta

F) A) and B)
G) None of the above

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Using a security market line graph,illustrate a security that is overpriced and has a beta of 0.89.Label all relevant points,including those that represent the overall market.Explain why the security plots as you have illustrated it.

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Student should draw an SML with beta on ...

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You own a portfolio that is invested 38 percent in Stock A,43 percent in Stock B,and the remainder in Stock C.The expected returns on these stocks are 10.9 percent,15.4 percent,and 9.1 percent,respectively.What is the expected return on the portfolio?


A) 10.55 percent
B) 11.02 percent
C) 11.67 percent
D) 12.49 percent
E) 13.05 percent

F) B) and D)
G) C) and D)

Correct Answer

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Stock A has a beta of 1.47 while Stock B has a beta of 1.08 and an expected return of 13.2 percent.What is the expected return on Stock A if the risk-free rate is 4.5 percent and both stocks have equal reward-to-risk premiums?


A) 12.12 percent
B) 15.07 percent
C) 16.34 percent
D) 16.89 percent
E) 17.78 percent

F) B) and D)
G) None of the above

Correct Answer

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You own a portfolio that has $1,900 invested in Stock A and $2,700 invested in Stock B.If the expected returns on these stocks are 9 percent and 15 percent,respectively,what is the expected return on the portfolio?


A) 10.57 percent
B) 11.14 percent
C) 11.96 percent
D) 12.52 percent
E) 13.07 percent

F) C) and D)
G) A) and B)

Correct Answer

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Showing 41 - 60 of 106

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