Homework Answers
Answer - negative correlations
Benefits of diversification are best achieved when the correlation between the securities of portfolio is minimum. Lower the correlation between securities within the portfolio, higher is the benefit of diversification in portfolio.
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Question 10 The benefits of diversification are greatest when asset returns have: O negative correlations O...
Diversification occurs when stocks with low correlations of returns are placed together in a portfolio. Identify...
Diversification occurs when stocks with low correlations of returns are placed together in a portfolio. Identify at least one type of firm that might exhibit low correlations of returns with the overall stock market? Explain why the correlations of these firms are expected to be low.
Index funds are popular investments because O they have low costs. O they have diversification benefits....
Index funds are popular investments because O they have low costs. O they have diversification benefits. O they ensure performance close to that of the relative benchmark. O all of the above.
According to the Capital Asset Pricing Model (CAPM), fairly-priced securities have o zero alphas. o positive...
According to the Capital Asset Pricing Model (CAPM), fairly-priced securities have o zero alphas. o positive alphas. o negative betas. o positive betas. QUESTION 8 Given the table below, what is the risk-free rate? Portfolio L (low risk) M(medium risk) H (high risk) Risk Premium 2% 4 8 Expected Return 7% 9 Risk (SD) 5% 10 20 6%. O 9%. O 7%. O 1%. 5%.
Question 12 When delta G is negative (1 point)* entropy is high and enthalpy low entropy...
Question 12 When delta G is negative (1 point)* entropy is high and enthalpy low entropy low and enthalpy high when entropy is negative when entropy is zero Question 13 Question 13 When delta G is negative (1 point) * O initial G is high and final G is low initial G is low and final G is high intial G is in equilibrium with final G O none Question 14 When delta G is negative (1 point) * O...
Question 9 Other things equal, diversification is most effective when Securities' returns are positively correlated. Securities'...
Question 9 Other things equal, diversification is most effective when Securities' returns are positively correlated. Securities' returns are high. Both sicurities' returns are positively correlated and securities' returns are high. You hold equal proportions of each security in a portfolio. Securities returns are uncorrelated.
8. Which of the following most likely has the largest standard deviation of returns? a. Treasury...
8. Which of the following most likely has the largest standard deviation of returns? a. Treasury bills b. US large stocks c. Corporate bonds 9. The standard deviation of portfolio returns is most likely a. less than the weighted average standard deviation of returns of its assets. b. equal to the weighted average standard deviation of returns of its assets. c. greater than the weighted average standard deviation of returns of its assets. 10. The correlation between a risk-free asset...
3. (2 points) Diversification is most effective when security returns are_ a high b. negatively correlated...
3. (2 points) Diversification is most effective when security returns are_ a high b. negatively correlated positively correlated d uncorrelated Asset Pricing (18 points) 4. (3 points) Suppose the CAPM holds and you have the following information on different assets Asset Systematie Risk Firm-specific Risk A 0.12 0.11 0.11 0.10 0.14 0.17 Which one of the following is true? a. Asset A has the largest beta b. Asset B has the largest beta
My question is Q 6, diversification. thank you Chapter 13 Retum, Risk and the Security Market...
My question is Q 6, diversification. thank you
Chapter 13 Retum, Risk and the Security Market Line 5. Expected Portfoli d. The directors of Big Widget die in a plane crash. Congress approves changes to the tax code that will increase the top marginal corporate tax rate. The legisla orate tax rate. The legislation had been debated for the previous six months. ed Portfolio Returns (LO1] If a portfolio has a positive investment in every at can the expected return...
when entropy is zero Question 13 When delta G is negative (1 point) * initial G...
when entropy is zero Question 13 When delta G is negative (1 point) * initial G is high and final G is low initial G is low and final G is high Intial G is in equilibrium with final G none Question 14 When delta G is negative (1 point)* All of the above O system has low entropy system is at equilibrium Othere is an attractor operating in the mechanism
Question 5 When delta G is negative (1 point) * enthalpy is negative reaction is spontaneous...
Question 5 When delta G is negative (1 point) * enthalpy is negative reaction is spontaneous rx is at equilibrium rx is non-spontaneous Question 6 If a rx has delta S positive and delta H negative, the rx is (1 point) * non-spontaneous at all temp O spontaneous at all temp spontaneous only at high temp O spontaneous only at low temp
Index funds are popular investments because O they have low costs. O they have diversification benefits. O they ensure performance close to that of the relative benchmark. O all of the above.
According to the Capital Asset Pricing Model (CAPM), fairly-priced securities have o zero alphas. o positive alphas. o negative betas. o positive betas. QUESTION 8 Given the table below, what is the risk-free rate? Portfolio L (low risk) M(medium risk) H (high risk) Risk Premium 2% 4 8 Expected Return 7% 9 Risk (SD) 5% 10 20 6%. O 9%. O 7%. O 1%. 5%.
Question 12 When delta G is negative (1 point)* entropy is high and enthalpy low entropy low and enthalpy high when entropy is negative when entropy is zero Question 13 Question 13 When delta G is negative (1 point) * O initial G is high and final G is low initial G is low and final G is high intial G is in equilibrium with final G O none Question 14 When delta G is negative (1 point) * O...
Question 9 Other things equal, diversification is most effective when Securities' returns are positively correlated. Securities' returns are high. Both sicurities' returns are positively correlated and securities' returns are high. You hold equal proportions of each security in a portfolio. Securities returns are uncorrelated.
8. Which of the following most likely has the largest standard deviation of returns? a. Treasury bills b. US large stocks c. Corporate bonds 9. The standard deviation of portfolio returns is most likely a. less than the weighted average standard deviation of returns of its assets. b. equal to the weighted average standard deviation of returns of its assets. c. greater than the weighted average standard deviation of returns of its assets. 10. The correlation between a risk-free asset...
3. (2 points) Diversification is most effective when security returns are_ a high b. negatively correlated positively correlated d uncorrelated Asset Pricing (18 points) 4. (3 points) Suppose the CAPM holds and you have the following information on different assets Asset Systematie Risk Firm-specific Risk A 0.12 0.11 0.11 0.10 0.14 0.17 Which one of the following is true? a. Asset A has the largest beta b. Asset B has the largest beta
My question is Q 6, diversification. thank you
Chapter 13 Retum, Risk and the Security Market Line 5. Expected Portfoli d. The directors of Big Widget die in a plane crash. Congress approves changes to the tax code that will increase the top marginal corporate tax rate. The legisla orate tax rate. The legislation had been debated for the previous six months. ed Portfolio Returns (LO1] If a portfolio has a positive investment in every at can the expected return...
when entropy is zero Question 13 When delta G is negative (1 point) * initial G is high and final G is low initial G is low and final G is high Intial G is in equilibrium with final G none Question 14 When delta G is negative (1 point)* All of the above O system has low entropy system is at equilibrium Othere is an attractor operating in the mechanism
Question 5 When delta G is negative (1 point) * enthalpy is negative reaction is spontaneous rx is at equilibrium rx is non-spontaneous Question 6 If a rx has delta S positive and delta H negative, the rx is (1 point) * non-spontaneous at all temp O spontaneous at all temp spontaneous only at high temp O spontaneous only at low temp
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