Question 1: Suppose the real rate is 2.98% and the inflation rate is 3.31%. Solve for the nominal rate. Use the Fisher Effect formula.
Question 2: What is the beta of the following portfolio?
Question3: What is the beta of the following portfolio?
Question 4: Portfolio diversification eliminates which one of the following?
 Total investment risk
 Portfolio risk premium
 Market risk
 Unsystematic risk
 Reward for bearing risk
Question 5: The systematic risk is same as:
 Unique risk
 Diversifiable risk
 Assetspecific risk
 Market risk
 Unsystematic risk
Question 6: Standard deviation measures _____ risk while beta measures _____ risk.
 systematic; unsystematic
 unsystematic; systematic
 total; unsystematic
 total; systematic
 assetspecific; market
Question 7: 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 8: A $36,000 portfolio is invested in a riskfree security and two stocks. The beta of stock A is 1.29 while the beta of stock B is 0.90. Onehalf of the portfolio is invested in the riskfree 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 9: The stock of Billingsley United has a beta of 0.92. The market risk premium is 8.4 percent and the riskfree 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 10: Suppose a stock had an initial price of $51.82 per share, paid a dividend of $5 per share during the year, and had an ending share price of $87.91. What are the percentage returns?
Question 11: 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 12: A portfolio is invested 46.5% in Stock A, 24.3% in Stock B, and the remainder in Stock C. The expected returns are 15.5%, 21.7%, and 20.7% respectively. What is the portfolio's expected returns?
Question 13: Calculate the expected returns of your portfolio
Stock

Invest

Exp Ret

A

$246

8.9%

B

$861

14.3%

C

$1,416

25.5%

Question 14: Suppose a stock had an initial price of $93.51 per share, paid a dividend of $5.8 per share during the year, and had an ending share price of $100.77. What are the percentage returns if you own 25 shares?
Question 15: Suppose a stock had an initial price of $87.39 per share, paid a dividend of $6.2 per share during the year, and had an ending share price of $89.38. If you own 296 shares, what are the dollar returns?
Question 16: You own a portfolio invested 10.01% in Stock A, 12.65% in Stock B, 13.78% in Stock C, and the remainder in Stock D. The beta of these four stocks are 1.14, 1.15, 0.99, and 0.73. What is the portfolio beta?
Question 17: You own a portfolio invested 16.52% in Stock A, 17.65% in Stock B, 26.85% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.68, 1.49, 0.3, and 1.43. What is the portfolio beta?
Question 18: 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 19: Suppose a stock had an initial price of $72.88 per share, paid a dividend of $4.7 per share during the year, and had an ending share price of $106.67. What are the dollar returns?
Question 20: You have observed the following returns on ABC's stocks over the last five years:
2.5%, 9%, 4.9%, 13.6%, 2.3%
What is the arithmetic average returns on the stock over this fiveyear period.
Question 21: Based on the following information, calculate the expected returns:

Prob

Return

Recession

30%

33.6%

Boom

70%

18.2%

Question 22: Calculate the expected returns of your portfolio
Stock

Invest

Exp Ret

A

$220

3.9%

B

$879

12.1%

C

$212

25.1%

Question 23: Semistrongform efficient markets are not weakform efficient.