Quiz Ch 07 – Portfolio Variance Formula for N-Stock Portfolio
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
What does the formula for portfolio variance contain for a portfolio of N-stocks?
What does the formula for portfolio variance contain for a portfolio of N-stocks?
In which range of values can correlation coefficients exist?
How does the unique risk change when the number of stocks in a portfolio is increased?
What is another term for market risk?
True or false: If a stock’s covariance with the market surpasses the market’s variance, the stock will invariably possess a beta above 1.0.
True or false: In a well-diversified portfolio, the beta is equivalent to the value-weighted average beta of the portfolio’s constituent securities.
True or false: A portfolio with a beta of one equals the market risk premium in expected return.
True or false: Stocks with low standard deviation invariably exhibit low betas.
True or false: Covariance between two stocks equals the product of their correlation coefficient and standard deviations.
True or false: The risk premium is determined by comparing the return of a security with the return on Treasury bills.