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Chapter 06 Practice Test Question 07 19 Calculating A Two Security Portfolio Standard Deviation An investor...
Chapter 06 Practice Test Question 07 Calculating A Two Security Portfolio Standard Deviation An investor puts 70% of th...
Chapter 06 Practice Test Question 07 Calculating A Two Security Portfolio Standard Deviation An investor puts 70% of their money in Stock 1 and the rest in Stock 2. Stock 1 has a standard deviation of 51% and Stock 2 has a standard deviation of 39%. The covariance between the two stocks is 0.091575. What is the portfolio's standard deviation? points Skipped 1 eBook 0 Print References 0 40.35% 0 47.21% 0 42.38%
Chapter 07 Practice Test Question 06 Alpha and the CAPM A stock with a beta of...
Chapter 07 Practice Test Question 06 Alpha and the CAPM A stock with a beta of 0.81 has an expected return of 11% and an alpha of 1.47% when the market expected return is 11%. What must be the risk free rate that satisfies these conditions? points Skipped eBook Print 10 0 0 0 References Chapter 07 Practice Test Question 07 Portfolio Beta An investor places $5,000 in Stock A, $4,000 in Stock B and $10,000 in Stock C. Stock...
Chapter 06 Practice Test Question 05 Calculating Ex-Post Covariance An analyst obtains 24 annual return observations...
Chapter 06 Practice Test Question 05 Calculating Ex-Post Covariance An analyst obtains 24 annual return observations for Stock 1 and Stock 2. The analyst finds that the sum of the squared deviations from the mean for Stock 1 and Stock 2 are 1.8775 and 1.4197 respectively. The sum of the product of the deviations from the mean for Stock 1 and Stock 2 is 1.7528. The covariance between the stocks is points Skipped eBook 1 Print 0 0.0648 References 0...
Chapter 07 Practice Test Question 09 CAPM and Security Pricing Stock A has an expected return...
Chapter 07 Practice Test Question 09 CAPM and Security Pricing Stock A has an expected return of 28% and a beta of 2.3. Stock B has an expected return of 28% and a beta of 1.9 when the risk free rate is 5%. Which of the following statements are correct? points Skipped 1. Stock A is underpriced relative to Stock B II. Stock B is underpriced relative to Stock A III. This situation is inconsistent with the CAPM IV. This...
Chapter 07 Practice Test Question 10 Working With the CAPM You believe that a stock is...
Chapter 07 Practice Test Question 10 Working With the CAPM You believe that a stock is fairly priced according to the CAPM. The stock has a beta of 2.8 when the market risk premium is 5.1% and the risk free rate is 2.6%. If the stock's dividend yield is 3.9% what is the stock's expected capital gain yield? points Skipped Multiple Choice eBook 0 Print 0 References 0 12.98% 0
Chapter 06 Practice Test Question 17 15 Asset Allocation Between Risky and Riskless Investments You have...
Chapter 06 Practice Test Question 17 15 Asset Allocation Between Risky and Riskless Investments You have a risky portfolio with a beta of 1.3. You wish to reduce the portfolio beta to 0.3. In order to do this you will change your asset allocation and add risk free government bonds. What percentage of your investment should be in government bonds and what percentage should be in the risky portfolio to accomplish your goal? points Skipped Multiple Choice eBook Print O...
statistics 4. An investor holds a portfolio consisting of two stocks. She puts 25% of her...
statistics
4. An investor holds a portfolio consisting of two stocks. She puts 25% of her money in Stock A and 75% into Stock B. Stock A has an expected return of Ri=8% and a standard deviation of 0,=12%. Stock B has an expected return of Rg=15% with a standard deviation of o,=22%. The portfolio return is P=0.25RA +0.75R, (a) Compute the expected return on the portfolio. (b) Compute the standard deviation of the returns on the portfolio assuming that...
You are creating a portfolio of two stocks. The first one has a standard deviation of...
You are creating a portfolio of two stocks. The first one has a standard deviation of 21% and the second one has a standard deviation of 35%. The correlation coefficient between the returns of the two is 0.1. You will invest 40% of the portfolio in the first stock and the rest in the second stock. What will be the standard deviation of this portfolio's returns? Answer in percent, rounded to two decimal places (e.g., 4.32%=4.32).
You are creating a portfolio of two stocks. The first one has a standard deviation of...
You are creating a portfolio of two stocks. The first one has a standard deviation of 29% and the second one has a standard deviation of 39%. The correlation coefficient between the returns of the two is 0.4. You will invest 47% of the portfolio in the first stock and the rest in the second stock. What will be the standard deviation of this portfolio's returns? Answer in percent, rounded to two decimal places (e.g., 4.32%=4.32).
6. Calculating a beta coefficient for a single stock Suppose that the standard deviation of returns...
6. Calculating a beta coefficient for a single stock Suppose that the standard deviation of returns for a single stock A IS A = 25%, and the standard deviation of the market return is on = 15%. If the correlation between stock A and the market is PAM - 0.6, then the stock's beta is prns against the market returns will equal the true value of Is it reasonable to expect that the beta value estimated via the regression of...
Chapter 06 Practice Test Question 07 Calculating A Two Security Portfolio Standard Deviation An investor puts 70% of their money in Stock 1 and the rest in Stock 2. Stock 1 has a standard deviation of 51% and Stock 2 has a standard deviation of 39%. The covariance between the two stocks is 0.091575. What is the portfolio's standard deviation? points Skipped 1 eBook 0 Print References 0 40.35% 0 47.21% 0 42.38%
Chapter 07 Practice Test Question 06 Alpha and the CAPM A stock with a beta of 0.81 has an expected return of 11% and an alpha of 1.47% when the market expected return is 11%. What must be the risk free rate that satisfies these conditions? points Skipped eBook Print 10 0 0 0 References Chapter 07 Practice Test Question 07 Portfolio Beta An investor places $5,000 in Stock A, $4,000 in Stock B and $10,000 in Stock C. Stock...
Chapter 06 Practice Test Question 05 Calculating Ex-Post Covariance An analyst obtains 24 annual return observations for Stock 1 and Stock 2. The analyst finds that the sum of the squared deviations from the mean for Stock 1 and Stock 2 are 1.8775 and 1.4197 respectively. The sum of the product of the deviations from the mean for Stock 1 and Stock 2 is 1.7528. The covariance between the stocks is points Skipped eBook 1 Print 0 0.0648 References 0...
Chapter 07 Practice Test Question 09 CAPM and Security Pricing Stock A has an expected return of 28% and a beta of 2.3. Stock B has an expected return of 28% and a beta of 1.9 when the risk free rate is 5%. Which of the following statements are correct? points Skipped 1. Stock A is underpriced relative to Stock B II. Stock B is underpriced relative to Stock A III. This situation is inconsistent with the CAPM IV. This...
Chapter 07 Practice Test Question 10 Working With the CAPM You believe that a stock is fairly priced according to the CAPM. The stock has a beta of 2.8 when the market risk premium is 5.1% and the risk free rate is 2.6%. If the stock's dividend yield is 3.9% what is the stock's expected capital gain yield? points Skipped Multiple Choice eBook 0 Print 0 References 0 12.98% 0
Chapter 06 Practice Test Question 17 15 Asset Allocation Between Risky and Riskless Investments You have a risky portfolio with a beta of 1.3. You wish to reduce the portfolio beta to 0.3. In order to do this you will change your asset allocation and add risk free government bonds. What percentage of your investment should be in government bonds and what percentage should be in the risky portfolio to accomplish your goal? points Skipped Multiple Choice eBook Print O...
statistics
4. An investor holds a portfolio consisting of two stocks. She puts 25% of her money in Stock A and 75% into Stock B. Stock A has an expected return of Ri=8% and a standard deviation of 0,=12%. Stock B has an expected return of Rg=15% with a standard deviation of o,=22%. The portfolio return is P=0.25RA +0.75R, (a) Compute the expected return on the portfolio. (b) Compute the standard deviation of the returns on the portfolio assuming that...
6. Calculating a beta coefficient for a single stock Suppose that the standard deviation of returns for a single stock A IS A = 25%, and the standard deviation of the market return is on = 15%. If the correlation between stock A and the market is PAM - 0.6, then the stock's beta is prns against the market returns will equal the true value of Is it reasonable to expect that the beta value estimated via the regression of...
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