Quiz Ch 08 – Portfolio Analysis and Stock Equilibrium Assessment
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
Given the data on Stocks A and B, which statement is accurate?
Given the data on Stocks A and B, which statement is accurate?
Given Stock A (10% expected return, 20% standard deviation) and Stock B (13% expected return, 30% standard deviation), with a 5% risk-free rate and a 6% market risk premium, and assuming equilibrium, Portfolio AB is divided 50-50. Both stocks have independent returns (zero correlation). Which statement is TRUE?
Given Stock A (beta: 1.2, standard deviation: 25%) and Stock B (beta: 1.4, standard deviation: 20%), forming Portfolio AB with a beta of 1.25 and a standard deviation of 18%. Which statement is TRUE?
With a risk-free rate of 6% and a market risk premium of 5%, your $1 million portfolio is divided into $700,000 invested in a stock with a beta of 1.2 and $300,000 in a stock with a beta of 0.8. Which statement below is true?
Which statement must be true for a specific set of project cash flows?
True or false: The CAPM, a multi-period model, considers securities’ maturities and aids in establishing the required rate of return at different systematic risk levels.
True or false: If two investors possess single portfolios, and assume equal unsystematic risks for stocks in both portfolios, Investor A’s portfolio with a beta of -2.0 and Investor B’s portfolio with a beta of +2.0 encounter identical levels of risk. Nevertheless, holders of either portfolio can decrease their risks by the same degree by incorporating “normal” stocks with a beta of 1.0.