1. An investment provides a 2% return semi-annually, its effective annual rate is
2%.
4%.
4.02%.
4.04%.
4.53%.
2. A year ago, you invested $10,000 in a savings account that pays an annual interest rate of 5%. What is your approximate annual real rate of return if the rate of inflation was 3.5% over the year?
1.5%.
10%.
7%.
3%.
1%.
3. If a portfolio had a return of 8%, the risk free asset return was 3%, and the standard deviation of the portfolio's excess returns was 20%, the Sharpe measure would be _____.
0.08
0.03
0.20
0.11
0.25
4. A year ago, you invested $10,000 in a savings account that pays an annual interest rate of 3%. What is your approximate annual real rate of return if the rate of inflation was 4% over the year?
1%.
-1%.
7%.
3%.
-2%.
5. What would be the dollar value of your positions in X, Y, and the T-bills, respectively, if you decide to hold a portfolio that has an expected outcome of $1,120?
Cannot be determined
$568; $378; $54
$568; $54; $378
$378; $54; $568
$108; $514; $378
6. You invest $100 in a risky asset with an expected rate of return of 0.11 and a standard deviation of 0.20 and a T-bill with a rate of return of 0.03.
What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.08?
85% and 15%
75% and 25%
62.5% and 37.5%
57% and 43%
cannot be determined
7. You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P, constructed with 2 risky securities, X and Y. The weights of X and Y in P are 0.60 and 0.40, respectively. X has an expected rate of return of 0.14 and variance of 0.01, and Y has an expected rate of return of 0.10 and a variance of 0.0081.
If you want to form a portfolio with an expected rate of return of 0.10, what percentages of your money must you invest in the T-bill, X, and Y, respectively if you keep X and Y in the same proportions to each other as in portfolio P?
0.25; 0.45; 0.30
0.19; 0.49; 0.32
0.32; 0.41; 0.27
0.50; 0.30; 0.20
cannot be determined
8. The riskiness of individual assets
should be considered for the asset in isolation.
should be considered in the context of the effect on overall portfolio volatility.
should be combined with the riskiness of other individual assets in the proportions these assets constitute the entire portfolio.
should be considered in the context of the effect on overall portfolio volatility and should be combined with the riskiness of other individual assets in the proportions these assets constitute the entire portfolio.
is irrelevant to the portfolio decision.