Question 81 Betsy Minor is considering the diversification benefits of a two stock portfolio. The expected return of stock A is 14 percent with a standard deviation of 18 percent and the expected return of stock B is 18 percent with a standard deviation of 24 percent. Minor intends to invest 40 percent of her money in stock A, and 60 percent in stock B. The correlation coefficient between the two stocks is 0.6. What is the variance and standard deviation of the two stock portfolio? A) Variance = 0.03836; Standard Deviation = 19.59%. B) Variance = 0.04666; Standard Deviation = 21.60%. C) Variance = 0.02206; Standard Deviation = 14.85%. D) Variance = 0.04954; Standard Deviation = 22.28%.
Question 82 Which of the following statements regarding total return and capital appreciation objectives is most accurate? Total Return Objective Capital Appreciation Objective A) Income Somewhat important Not important B) Suitable for Short-term investors Medium-term investors C) Growth over time Not important Very important D) Risk tolerance Greater than for Capital Appreciation Greater than for total return
Question 83 Which of the following statements about asset pricing models is most accurate? A) Assuming assets are not perfectly positively correlated, the systematic risk of a portfolio decreases as more assets are added. B) Adding the risk-free asset to a portfolio will reduce return and total risk. C) According to the Capital Asset Pricing Model (CAPM), the expected rate of return of a portfolio with a beta of 1.0 is the market expected return. D) It is difficult for the individual investor to achieve the benefits from diversification because significantly reducing risk requires the purchase of approximately 1,000 securities.
Question 84 Two investors, X and Y, have varying indifference curves. The indifference curve for investor X has a much steeper slope than the indifference curve for investor Y. All else being equal, both investors prefer less risk to more, and prefer higher returns to lower. Which of the following statements about the optimal portfolio and level of risk aversion for investor X, compared to investor Y, is most accurate? Optimal Portfolio Risk Aversion A) Lower on the efficient frontier curve Lower B) Higher on the efficient frontier curve Higher C) Lower on the efficient frontier curve Lower D) Lower on the efficient frontier curve Higher Question 85 Which of the following statements on the forms of the efficient market hypothesis (EMH) is least accurate? A) The semi-strong form EMH addresses market and non-market public information. B) The weak-form EMH states that stock prices reflect current public market information and expectations. C) The strong-form EMH assumes perfect markets. D) The weak-form EMH suggests that technical analysis will not provide excess returns while the semi-strong form suggests that fundamental analysis cannot achieve excess returns.
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发表于 2008-11-6 18:13
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