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
- Asset-specific risk
- Market risk
- Unsystematic risk
Question 6: Standard deviation measures _____ risk while beta measures _____ risk.
- systematic; unsystematic
- unsystematic; systematic
- total; unsystematic
- total; systematic
- asset-specific; 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 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 9: 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 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 five-year 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: Semi-strong-form efficient markets are not weak-form efficient.