Which of the following is incorrect, regarding the beta?
a. Beta for market portfolio is less than one
b. Assets with beta less than one are said to have lower systematic risk c. Beta is a measure of total risk
d. Beta for market portfolio is less than one and beta is a measure of total risk Shares in Flamingo Hotel Holdings have a beta of 2.7. If the expected return on the market portfolio is 8.2% and the risk free rate is 3.3%, what return should investors demand on Flamingo shares? Select one:
Aunty Vera has given us $500,000 to invest. We have found a stock we want to research “Sensational Weights and Measures”. Using our new knowledge we use CAPM to calculate that the expected return is 29%. We find that its Beta is 1.6.
The Risk Free Rate is 4.5%.
With our $500,000 we decide to invest 80% into the risk free investment and 20% into “Sensational Weights and Measures” stock. What is the expected return on this portfolio? Select one:
Given exactly the same information as Question 3, what is the reward to risk ratio of this stock? Select one:
On 1 January an investor purchased shares in Big Golf for $87 On 31 December of that year the shares were worth $115.
During the year a dividend of $2.58 was paid.
Inflation during the year was 1.9%.
What was the investor’s total real return on this stock?
Sensation Limited issues bonds with a $1,000 face value that make coupon payments of $40 every three months. What is the coupon rate? Select one:
You examine two stocks. Battery City has a beta of 1.7, Bottlers Inc. has a beta of 2.6. Bottlers Inc. has: Select one:
a. lower systematic risk and higher total risk
b. higher systematic risk and lower total risk
c. both higher systematic risk and higher...
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