Hrm/531 Week 9
Finance Ch. 8
1)Most manager are risk-averse, since for a given increase in risk they require an increase in return True
2) IF a person required return decreases for an increase in risk that person is said to be Risk-Seeking
3.) Risk aversion is the behavior exhibited by managers who require a greater than proportional _________
(a) increase in return, for a given decrease in risk.
(b) increase in return, for a given increase in risk.
(c) decrease in return, for a given increase in risk.
(d) decrease in return, for a given decrease in risk.
4.)On Average, during the past 75 years, the return on the U.S. Treasury bills has exceeded the return on long term government bonds False
5.) The higher the coefficient of variation, the …show more content…
(d) stabilizes to a level between the asset with the higher risk and the asset with the lower risk.
13)Systematic risk is that portion of an assets risk that is attributable to firm specific random causes. False
14)The beta of a portfolio is a function of the standard deviations of the individual securities in the portfolio the proportion of the portfolio invested in those securities and the correlation between the return of those securities False
15War, inflation and the condion of the foreign markets are all example of Nondiversifiable risk
16A beta coefficient of 1 represents an asset that
(a) is more responsive than the market portfolio.
(b) has the same response as the market portfolio.
(c) is less responsive than the market portfolio.
(d) is unaffected by market movement.
17)The beta of a portfolio is the weighted average of the betas of the individual assets in the portfolio
18What is Nico’s portfolio beta if he invests an equal amount in asset X with a beta of 0.60, asset Y with a beta of 1.60, the risk-free asset, and the market portfolio?
(a) 1.20
(b) 1.00
(c) 0.80
(d) 0.60
19)The security market line is not stable over time and shift in it can result in a change in required …show more content…
He received a dividend of $2.00 per share at the end of 2002 and $3.00 per share at the end of 2003. At the end of 2004, Nico collected a dividend of $4.00 per share and sold his stock for $18.00 per share. What was Nico's realized holding period return? What was Nico's compound annual rate of return?
A) -12.5%; -4.4%
B) +12.5%; +4.4%
13 A(n) ______ portfolio maximizes return for a given level of risk, or minimizes risk for a given level of return efficient
14) Table 5.1Expected Return (%) Year AssetA AssetB AssetC
1 6 8 6
2 7 7 7
3 8 6 8
The correlation of returns between Asset A and Asset B can be characterized as (See Table
1)Most manager are risk-averse, since for a given increase in risk they require an increase in return True
2) IF a person required return decreases for an increase in risk that person is said to be Risk-Seeking
3.) Risk aversion is the behavior exhibited by managers who require a greater than proportional _________
(a) increase in return, for a given decrease in risk.
(b) increase in return, for a given increase in risk.
(c) decrease in return, for a given increase in risk.
(d) decrease in return, for a given decrease in risk.
4.)On Average, during the past 75 years, the return on the U.S. Treasury bills has exceeded the return on long term government bonds False
5.) The higher the coefficient of variation, the …show more content…
(d) stabilizes to a level between the asset with the higher risk and the asset with the lower risk.
13)Systematic risk is that portion of an assets risk that is attributable to firm specific random causes. False
14)The beta of a portfolio is a function of the standard deviations of the individual securities in the portfolio the proportion of the portfolio invested in those securities and the correlation between the return of those securities False
15War, inflation and the condion of the foreign markets are all example of Nondiversifiable risk
16A beta coefficient of 1 represents an asset that
(a) is more responsive than the market portfolio.
(b) has the same response as the market portfolio.
(c) is less responsive than the market portfolio.
(d) is unaffected by market movement.
17)The beta of a portfolio is the weighted average of the betas of the individual assets in the portfolio
18What is Nico’s portfolio beta if he invests an equal amount in asset X with a beta of 0.60, asset Y with a beta of 1.60, the risk-free asset, and the market portfolio?
(a) 1.20
(b) 1.00
(c) 0.80
(d) 0.60
19)The security market line is not stable over time and shift in it can result in a change in required …show more content…
He received a dividend of $2.00 per share at the end of 2002 and $3.00 per share at the end of 2003. At the end of 2004, Nico collected a dividend of $4.00 per share and sold his stock for $18.00 per share. What was Nico's realized holding period return? What was Nico's compound annual rate of return?
A) -12.5%; -4.4%
B) +12.5%; +4.4%
13 A(n) ______ portfolio maximizes return for a given level of risk, or minimizes risk for a given level of return efficient
14) Table 5.1Expected Return (%) Year AssetA AssetB AssetC
1 6 8 6
2 7 7 7
3 8 6 8
The correlation of returns between Asset A and Asset B can be characterized as (See Table