QUESTION 1
1. If markets are efficient, the difference between the instrinsic value and the market value of the comapny's security is:
•positive
•negative
•zero
QUESTION 2
1. Semi-strong-form efficient markets are not weak-form efficient.
•True
•False
QUESTION 3
1. Calculate the expected returns of your portfolio
|
Stock
|
Invest
|
Exp Ret
|
|
A
|
$427
|
3.6%
|
|
B
|
$921
|
16.7%
|
|
C
|
$330
|
28.7%
|
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.
QUESTION 4
1. Suppose a stock had an initial price of $69.76 per share, paid a dividend of $8 per share during the year, and had an ending share price of $100.02. What are the percentage returns?
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.
QUESTION 5
1. Suppose a stock had an initial price of $68.33 per share, paid a dividend of $9.8 per share during the year, and had an ending share price of $81.78. If you own 71 shares, what are the dollar returns?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.
QUESTION 6
1. You own a portfolio invested 18.5% in Stock A, 12.16% in Stock B, 21.84% in Stock C, and the remainder in Stock D. The beta of these four stocks are 1.14, 0.91, 0.84, and 0.83. What is the portfolio beta?
Note: Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
QUESTION 7
1. Based on the following information, calculate the expected returns:
|
|
Prob
|
Return
|
|
Recession
|
30%
|
27.6%
|
|
Boom
|
70%
|
11.7%
|
Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.
QUESTION 8
1. A portfolio is invested 48.3% in Stock A, 23.6% in Stock B, and the remainder in Stock C. The expected returns are 16%, 32.3%, and 11.8% respectively. What is the portfolio's expected returns?
QUESTION 9
1. You own a portfolio invested 17.6% in Stock A, 16.54% in Stock B, 18.22% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.49, 0.52, 0.44, and 0.85. What is the portfolio beta?
QUESTION 10
1. Suppose a stock had an initial price of $69.44 per share, paid a dividend of $8.8 per share during the year, and had an ending share price of $97.46. What are the percentage returns?
QUESTION 11
1. Suppose a stock had an initial price of $76.49 per share, paid a dividend of $8 per share during the year, and had an ending share price of $86.38. What are the percentage returns if you own 25 shares?
QUESTION 12
1. Suppose a stock had an initial price of $92.58 per share, paid a dividend of $7.9 per share during the year, and had an ending share price of $85.61. What are the dollar returns?
QUESTION 13
1. You have observed the following returns on ABC's stocks over the last five years:
3.5%, 8.2%, -13.5%, 12.7%, -2.2%
What is the arithmetic average returns on the stock over this five-year period.
QUESTION 14
1. Suppose the returns for Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%.
Compute the standard deviation of the returns.
QUESTION 15
1. Calculate the expected returns of your portfolio
|
Stock
|
Invest
|
Exp Ret
|
|
A
|
$211
|
9.1%
|
|
B
|
$741
|
18.6%
|
|
C
|
$1,804
|
22.6%
|
QUESTION 16
1. Standard deviation measures _____ risk while beta measures _____ risk.
•systematic; unsystematic
•unsystematic; systematic
•total; unsystematic
•total; systematic
•asset-specific; market
QUESTION 17
1. You own a portfolio that has $1,900 invested in Stock A and $2,700 invested in Stock B. If the expected returns on these stocks are 9 percent and 15 percent, respectively, what is the expected return on the portfolio?
•10.57 percent
•11.14 percent
•11.96 percent
•12.52 percent
•13.07 percent
QUESTION 18
1. What is the beta of the following portfolio?
|
Stock
|
Value
|
Beta
|
|
S
|
$32,800
|
0.97
|
|
T
|
16,700
|
1.26
|
|
U
|
21,100
|
0.79
|
|
V
|
4,600
|
1.48
|
•0.98
•1.02
•1.11
•1.14
•1.20
QUESTION 19
1. A $36,000 portfolio is invested in a risk-free security and two stocks. The beta of stock A is 1.29 while the beta of stock B is 0.90. One-half of the portfolio is invested in the risk-free security. How much is invested in stock A if the beta of the portfolio is 0.58?
•$6,000
•$9,000
•$12,000
•$15,000
•$18,000
QUESTION 20
1. You own a portfolio of two stocks, A and B. Stock A is valued at $6,540 and has an expected return of 11.2 percent. Stock B has an expected return of 8.1 percent. What is the expected return on the portfolio if the portfolio value is $9,500?
•9.58 percent
•9.62 percent
•9.74 percent
•9.97 percent
•10.23 percent
QUESTION 21
1. What is the beta of the following portfolio?
|
Stock
|
Value
|
Beta
|
|
J
|
$21,600
|
1.48
|
|
K
|
13,000
|
1.13
|
|
L
|
46,000
|
.88
|
|
M
|
19,800
|
1.08
|
•1.08
•1.14
•1.17
•1.21
•1.23
QUESTION 22
1. The stock of Billingsley United has a beta of 0.92. The market risk premium is 8.4 percent and the risk-free rate is 3.2 percent. What is the expected return on this stock?
•8.87 percent
•9.69 percent
•10.93 percent
•11.52 percent
•12.01 percent
QUESTION 23
1. The systematic risk is same as:
•Unique risk
•Diversifiable risk
•Asset-specific risk
•Market risk
•Unsystematic risk
QUESTION 24
1. Portfolio diversification eliminates which one of the following?
Choose only one option.
•Portfolio risk premium
• Market risk
•Reward for bearing risk
•Unsystematic risk
•Total investment risk
QUESTION 25
1. Suppose the real rate is 3.59% and the inflation rate is 5.62%. Solve for the nominal rate. Use the Fisher Effect formula.