Question

When looking at the correlation of a pair of assets, we say the correlation is weak (and therefore good for diversifcation) is

Question 1 options:

	if it is close to zero as long as it's positive
	it is highly positive
	if it is close to zero - whether negative or positive
	if it is highly negative

Question 2 (1 point)

In the simplified CAPM model, the dependent variable (that is, the Y variable) is

Question 2 options:

	The returns of the stock with the highest Sharpe Ratio
	The Market's return
	The difference between the asset's returns and the market's return
	The Asset's return

Question 3 (1 point)

When looking to replace a low performing stock in the portfolio, which attribute or value would NOT likely be effective?

Question 3 options:

	Its current price
	Its performance compared to the S&P
	Its sector performance compared to other sectors in the S&P
	Its correlation compared to the other stocks in the portfolio

Question 4 (1 point)

A beta less than one does not necessarily mean the risk is lower than the S&P because

Question 4 options:

	We need to also consider Alpha
	Beta does not measure risk
	Beta is just an estimate
	A Beta lower than one implies greater risk

Question 5 (1 point)

We can calculate the probability of an estimated statistic exceeding a certain value if we know

Question 5 options:

	its standard error
	its geometric mean
	its correlation with the S&P
	the sample size

Answer 1

pai assc Correlation when weak CoVelation the Say aUve Nega ighly Jf it diversi ficaia nega tive Con lauon the hig ken be will option the mo del the CA pm Smplified -Ibe n Nanable the vamable deperdent Te turn a soct Correct optron the So