Finance

Given the following information, what is the variance of the returns on this stock? State of Economy Probability of State of Economy Rate of Return Boom .18 .29 Normal .77 .14 Recession .05 -.45 0.021538 0.021506 wrong 0.021449 0.0215641 0.021387

.021449

What is the beta of the following portfolio? Stock Value Beta J $21,600 1.48 K 13,000 1.13 L 46,000 .99 M 19,800 1.08 1.15 1.23 1.13 1.21 1.17

1.13

BJB, Inc. stock has an expected return of 15.15 percent. The risk-free rate is 3.8 percent and the market risk premium is 8.6 percent. What is the stock's beta? 1.19 wrong 1.48 1.32 1.21 1.62-wrong

1.32

Currently, the risk-free rate is 4.0 percent. Stock A has an expected return of 9.6 percent and a beta of 1.08. Stock B has an expected return of 13.5 percent. The stocks have equal reward-to-risk ratios. What is the beta of Stock B? 1.52 wrong 1.83 1.21 1.33 1.78 wrong

1.78

You own a portfolio that is invested 38 percent in Stock A, 43 percent in Stock B, and the remainder in Stock C. The expected returns on these stocks are 10.9 percent, 15.4 percent, and 9.1 percent, respectively. What is the expected return on the portfolio? 13.05 percent 13.05 percent 10.55 percent-wrong 11.67 percent-wrong 12.49 percent-check the answer 11.02 percent

12,49

Given the following information, what is the standard deviation of the returns on this stock? State of Economy Probability of State of Economy Rate of Return Boom .20 .21 Normal .70 .13 Recession .10 -.09 7.55 percent-wrong 8.06 percent-wrong 7.80 percent 7.91 percent 7.38 percent

7.8

The systematic risk principle states that the expected return on a risky asset depends only on which one of the following? Unique risk Unsystematic risk Diversifiable risk Market risk Asset-specific risk

Market risk

Standard deviation measures _____ risk while beta measures _____ risk. unsystematic; systematic total; systematic asset-specific; market systematic; unsystematic total; unsystematic

Totals; systematic

Systematic risk is: risk that affects a limited number of securities. defined as the total risk associated with surprise events. measured by standard deviation. measured by beta. totally eliminated when a portfolio is fully diversified.

measured by beta,

Portfolio diversification eliminates which one of the following? Market risk Portfolio risk premium Reward for bearing risk Unsystematic risk Total investment risk

unsystematic risk