1. A client comes to you with a portfolio of securities that he has put together. Based on your analysis the beta of the portfolio is +1. What does this mean?
A. The portfolio exhibits too much business specific risk.
B. The portfolio exhibits systematic risk.
C. The portfolio is undiversified.
D. The portfolio will return less than the market.
2. Jan wants to plan for her daughter’s education. Her daughter, Rachel was born today and will go to college at age 18 for five years. Tuition is currently $15,500 per year, in today’s dollars. Jan anticipates tuition inflation of 6% and believes she can earn an 11% return on her investment. How much must Jan save at the end of each year, if she wants to make her last payment at the beginning of her daughter’s first year of college?
A. $4,009.13
B. $7,334.72
C. $3,882.03
D. $2,547.54