Quiz Ch 07 – T/F Relationship Between Standard Deviations and Betas
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
True or false: High standard deviation in stocks implies high betas.
True or false: High standard deviation in stocks implies high betas.
True or false: When comparing stocks to 10-year U.S. Treasury bonds, the resulting risk premium is anticipated to be smaller than the risk premium obtained from comparing stocks to U.S. Treasury bills.
True or false: Within the United States, the authors suggest a plausible risk premium range of 5 percent to 8 percent.
True or false: Beta and covariance are the standard statistical measures of stock return variability.
True or false: Generally, stock returns tend to move together, resulting in pairs of stocks showing positive covariances and correlations.
True or false: Treasury bills generally yield higher average returns, both nominally and in real terms, compared to long-term government bonds.
True or false: Unique risk, the portion of portfolio risk that persists even with diversification, is an inherent component.
What does Beta assess?
How many variance terms are included in the formula for portfolio variance in a portfolio of N-stocks?