Q22. Luis Green is an investor who uses the security market line to determine whether securities are properly valued. He is evaluating the stocks of two companies, Mia Shoes and Video Systems. The stock of Mia Shoes is currently trading at $15 per share, and the stock of Video Systems is currently trading at $18 per share. Green expects the prices of both stocks to increase by $2 in a year. Neither company pays dividends. Mia Shoes has a beta of 0.9 and Video Systems has a beta of (-0.30). If the market return is 15% and the risk-free rate is 8%, which trading strategy will Green employ? Mia Shoes Video Systems A) Buy Sell B) Buy Buy C) Sell Buy
Q23. Given a beta of 1.25 and a risk-free rate of 6%, what is the expected rate of return assuming a 12% market return? A) 13.5%. B) 10%. C) 31%.
Q24. The expected rate of return is 1.5 times the 16% expected rate of return from the market. What is the beta if the risk free rate is 8%? A) 2. B) 3. C) 4.
Q25. Consider the following graph of the Security Market Line (SML). The letters X, Y, and Z represent risky asset portfolios. The SML crosses the y-axis at the point 0.07. The expected market return equals 13.0%. Note: The graph is NOT drawn to scale. Using the graph above and the information provided, which of the following statements is most accurate? A) The expected return (or holding period return) for Portfolio Z equals 14.8%. B) Portfolio Y is undervalued. C) Portfolio X's required return is greater than the market expected return.
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发表于 2009-1-22 11:11
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