Business & Finance homework help

Question 1

1. Your portfolio is comprised of 30% of stock X, 50% of stock Y, and 20% of stock Z. Stock X has a beta of .64, stock Y has a beta of 1.48, and stock Z has a beta of 1.04. What is the beta of your portfolio?

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A. 1.01

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B. 1.05

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C. 1.09

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D. 1.14

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E. 1.18

2 points

Question 2

1. Which one of the following is an example of systematic risk?

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A. the price of lumber declines sharply

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B. airline pilots go on strike

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C. the Federal Reserve increases interest rates.

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D. a hurricane hits a tourist destination

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E. people become diet conscious and avoid fast food restaurants

2 points

Question 3

1. The dominant portfolio with the lowest possible risk is:

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A. the efficient frontier.

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B. the minimum variance portfolio.

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C. the upper tail of the efficient set.

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D. the tangency portfolio.

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E. None of these.

2 points

Question 4

1. Beta measures:

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A. the ability to diversify risk.

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B. how an asset covaries with the market.

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C. the actual return on an asset.

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D. the standard deviation of the assets’ returns.

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E. All of these.

2 points

Question 5

1. The measure of beta associates most closely with:

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A. idiosyncratic risk.

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B. risk-free return.

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C. systematic risk.

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D. unexpected risk.

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E. unsystematic risk.

2 points

Question 6

1. The separation principle states that an investor will:

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A. choose any efficient portfolio and invest some amount in the riskless asset to generate the expected return.

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B. choose an efficient portfolio based on individual risk tolerance or utility.

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C. never choose to invest in the riskless asset because the expected return on the riskless asset is lower over time.

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D. invest only in the riskless asset and tangency portfolio choosing the weights based on individual risk tolerance.

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E. All of these.

2 points

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Question 7

1. The diversification effect of a portfolio of two stocks:

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A. increases as the correlation between the stocks declines.

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B. increases as the correlation between the stocks rises.

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C. decreases as the correlation between the stocks rises.

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D. Both increases as the correlation between the stocks declines; and decreases as the correlation between the stocks rises.

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E. None of these.

2 points

Question 8

1. You purchased 300 shares of Deltona, Inc. stock for $44.90 a share. You have received a total of $630 in dividends and $14,040 in proceeds from selling the shares. What is your capital gains yield on this stock?

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A. 4.06%

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B. 4.23%

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C. 4.68%

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D. 8.55%

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E. 8.91%

2 points

Question 9

1. You bought 100 shares of stock at $20 each. At the end of the year, you received a total of $400 in dividends, and your stock was worth $2,500 total. What was your total dollar capital gain and total dollar return?

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A. $400; $500

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B. $400; $900

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C. $500; $900

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D. $900; $2,500

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E. None of these

2 points

Question 10

1. One year ago, you purchased a stock at a price of $32 a share. Today, you sold the stock and realized a total return of 25%. Your capital gain was $6 a share. What was your dividend yield on this stock?

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A. 1.25%

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B. 3.75%

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C. 6.25%

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D. 18.75%

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E. 21.25%

2 points

Question 11

1. The market portfolio of common stocks earned 14.7% in one year. Treasury bills earned 5.7%. What was the real risk premium on equities?

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A. 5.0%

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B. 6.5%

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C. 9.0%

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D. 12.2%

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E. 18.7%

2 points

Question 12

1. A stock has an expected rate of return of 8.3% and a standard deviation of 6.4%. Which one of the following best describes the probability that this stock will lose 11% or more in any one given year?

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A. less than 0.5%

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B. less than 1.0%

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C. less than 1.5%

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D. less than 2.5%

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E. less than 5%

2 points

Question 13

1. You just sold 200 shares of Langley, Inc. stock at a price of $38.75 a share. Last year you paid $41.50 a share to buy this stock. Over the course of the year, you received dividends totaling $1.64 per share. What is your capital gain on this investment?

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A. -$550

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B. -$222

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C. -$3

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D. $550

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E. $878

2 points

Question 14

1. Today, you sold 200 shares of SLG, Inc. stock. Your total return on these shares is 12.5%. You purchased the shares one year ago at a price of $28.50 a share. You have received a total of $280 in dividends over the course of the year. What is your capital gains yield on this investment?

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A. 4.80%

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B. 5.00%

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C. 6.67%

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D. 7.59%

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E. 11.67%

2 points

Question 15

1. Winslow, Inc. stock is currently selling for $40 a share. The stock has a dividend yield of 3.8%. How much dividend income will you receive per year if you purchase 500 shares of this stock?

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A. $152

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B. $190

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C. $329

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D. $760

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E. $1,053

 

 

 
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