The systematic risk principle states that the expected


Part A) A stock is expected to return 13% in an economic boom, 10% in a normal economy, and 3% in a recessionary economy. Which one of the following will increase the overall expected rate of return on this stock?

A. A increase in the probability of a recession occurring

B. a decrease in the probability of an economic boom

C. An increase in the probability of an economic boom

D. An decrease in the rate of return in a recessionary economy

Part B) The systematic risk principle states that the expected return on a risky asset depends only on which one of the following ?

A. Company-specific risk

B. Diversifiable risk

C. systematic risk

D. unsystematic risk

Part C) you own a $35,000 portfolio consisting of two stocks, A and B. Stock A is valued at $16,800 and has an expected retun of 10%. Stock b has an expected return of 5%. what are the weights of stock A and B in the portfolio?

A. 35% , 65%

B. 48% , 52 %

C. 52%, 48%

D. 65%, 35%

Part D) Based on the information from Part C, What is the expected return in the portfolio?

A. 9.40%

B. 7.40 %

C. 8.95%

D. 10.83%

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Financial Management: The systematic risk principle states that the expected
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