**A. Threat that deserve to be removed through diversification is dubbed firm-specific risk B. The reduced the correlation amongst assets, the lower the risk to a portfolio. C. Together we randomly add assets to a investment portfolio (or boost the variety of assets in the portfolio), portfolios hazard increases. D. A correlation the -1 in between two heritage will alleviate or get rid of their portfolio"s risk.**

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C. As we randomly include assets to a portfolio (or boost the number of assets in the portfolio), portfolios threat increases.

Which one of the following statement is exactly A. Minimum Variance portfolio has actually the best return risk ratio amongst all portfolios along the investment opportunity set. B. Given different level of danger aversion and also hold whatever else the same, offered the invest opportunity collection of risky portfolios, investors need to invest in a portfolio the he/she deems ideal for his hazard tolerance level. C. Investor should take into consideration investing in portfolios the lies below the Minimum Variance portfolio. D. Solitary index model assume the security co-moves with just one solitary factor, normally the sector index. Stocks carry out not correlate through each other. E. V n legacy to type portfolios, the effective frontier conquer the other portfolios, we can invest in any kind of portfolio top top the reliable frontier.

D. Solitary index design assume the protection co-moves with only one single factor, commonly the industry index. Stocks carry out not correlate through each other.

An investor"s degree of danger aversion will identify his or her ______. A. Optimal risky portfolio B. Risk-free price C. Optimal mix of the risk-free asset and risky asset D. Capital allocation line

which among the following is correct? A. Diversification is most effective when defense returns space not correlated. B. The expected rate of return the a investment portfolio of risky securities is the weighted typical of the securities" supposed returns. C. The conventional deviation that a investment portfolio of risky securities is the weighted mean of the securities" traditional deviation. D. Firm-specific threat is also called nondiversifiable risk.

B. The expected price of return of a investment portfolio of risky securities is the weighted typical of the securities" supposed returns.

You put fifty percent of your money in a share portfolio that has actually an meant return the 14% and a standard deviation that 25%. You placed the rest of your money in a risky bond portfolio that has an meant return of 6% and also a traditional deviation that 10%. If the correlation in between the two is 1, the standard deviation that the resulting portfolio will be A. An ext than 14% yet less 보다 25% B. Same to 17.5% C. More than 25% D. Same to 10%

Following the last problem, if the correlation is much less than 1, regarding the portfolio"s typical deviation which one of the adhering to statement is most correct? A. Higher than 17.5% B. Reduced than 10% C. Between 10% and 17.5% D. In between 10% and 25%

Following the critical problem, if the stock and also bond portfolios have actually a correlation of .55. Just how much is the portfolio"s standard deviation? A. 15% B. 15.81% C. 14% D. Nobody of the above*don;"t usage percents for stnd dev**

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C. As we randomly include assets to a portfolio (or boost the number of assets in the portfolio), portfolios threat increases.

Which one of the following statement is exactly A. Minimum Variance portfolio has actually the best return risk ratio amongst all portfolios along the investment opportunity set. B. Given different level of danger aversion and also hold whatever else the same, offered the invest opportunity collection of risky portfolios, investors need to invest in a portfolio the he/she deems ideal for his hazard tolerance level. C. Investor should take into consideration investing in portfolios the lies below the Minimum Variance portfolio. D. Solitary index model assume the security co-moves with just one solitary factor, normally the sector index. Stocks carry out not correlate through each other. E. V n legacy to type portfolios, the effective frontier conquer the other portfolios, we can invest in any kind of portfolio top top the reliable frontier.

D. Solitary index design assume the protection co-moves with only one single factor, commonly the industry index. Stocks carry out not correlate through each other.

An investor"s degree of danger aversion will identify his or her ______. A. Optimal risky portfolio B. Risk-free price C. Optimal mix of the risk-free asset and risky asset D. Capital allocation line

which among the following is correct? A. Diversification is most effective when defense returns space not correlated. B. The expected rate of return the a investment portfolio of risky securities is the weighted typical of the securities" supposed returns. C. The conventional deviation that a investment portfolio of risky securities is the weighted mean of the securities" traditional deviation. D. Firm-specific threat is also called nondiversifiable risk.

B. The expected price of return of a investment portfolio of risky securities is the weighted typical of the securities" supposed returns.

You put fifty percent of your money in a share portfolio that has actually an meant return the 14% and a standard deviation that 25%. You placed the rest of your money in a risky bond portfolio that has an meant return of 6% and also a traditional deviation that 10%. If the correlation in between the two is 1, the standard deviation that the resulting portfolio will be A. An ext than 14% yet less 보다 25% B. Same to 17.5% C. More than 25% D. Same to 10%

Following the last problem, if the correlation is much less than 1, regarding the portfolio"s typical deviation which one of the adhering to statement is most correct? A. Higher than 17.5% B. Reduced than 10% C. Between 10% and 17.5% D. In between 10% and 25%

Following the critical problem, if the stock and also bond portfolios have actually a correlation of .55. Just how much is the portfolio"s standard deviation? A. 15% B. 15.81% C. 14% D. Nobody of the above*don;"t usage percents for stnd dev

The optimal risky portfolio have the right to be established by finding:I: The minimum-variance point on the reliable frontierII. The maximum-return allude on the effective frontier and also the minimum-variance allude on the reliable frontierIII. The tangency allude of the funding market line and also the efficient frontierIV. The line v the steepest slope the connects the risk-free price to the efficient frontier A. I and also II just B. II and also III just C. III and IV only D. I and also IV only

A portfolio is created of two stocks, A and also B. Stock A has actually a standard deviation that return that 24%, while stock B has a standard deviation the return of 18%. Stock A comprises 60% of the portfolio, while share B comprises 40% the the portfolio. If the variance that return on the portfolio is .0380, the correlation coefficient in between the returns on A and also B is _________.A. .583 B. .225 C. .327 D. .128############?????????

The conventional deviation of return on invest A is .10, if the standard deviation the return on invest B is .05. If the covariance of return on A and also B is .0030, the correlation coefficient in between the return on A and B is _________. A. .12 B. .36 C. .60 D. .77

11. Legacy A has actually an expected return that 15% and a reward-to-variability ratio of .5. Heritage B has actually an intended return that 20% and a reward-to-variability ratio of .4. A risk-averse investor would choose a portfolio using the risk-free asset and also _______. A. Asset A B. Asset B C. No risky heritage D. Can"t tell indigenous the data given

A. Heritage A

1. Which among the complying with correlation is ideal for diversification?A) 1B) -1C) 0D) -2

Answer B (correlation can"t be -2)

1. Investing in two assets through a correlation coefficient of 1.0 will alleviate which sort of risk? A) industry risk B) unique risk C) Unsystematic threat D) no one of the above

1. Legacy A has an supposed return the 15% and a reward-to-variability ratio of .4. Asset B has an expected return the 20% and also a reward-to-variability ratio of .3. A risk-averse investors would favor a portfolio using the risk-free asset and also _______. A) legacy A B) heritage B C) no risky legacy D) can"t tell native the data given

1. The optimal risky portfolio can be identified by recognize _____________. A) the minimum variance point on the efficient frontier B) the maximum return suggest on the reliable frontier C) the tangency point of the funding market line and the reliable frontier D) the line v the steepest slope that connects the risk free rate to the reliable frontier E) C and also D

E) C and also D

1. The market portfolio has actually a beta of __________. A) -1.0 B) 0 C) 0.5 D) 1.0

D) 1.0

1. In a fine diversified portfolio, __________ risk is negligible. A) non-diversifiable B) industry C) organized D) unsystematic

1. Hazard that have the right to be eliminated through diversification is dubbed ______ risk. A. UnsystematicB. Firm-specificC. DiversifiableD. Every one of the above

1. The organized risk that a defense __________. A) is likely to be higher in a rising industry B) outcomes from its very own unique factors C) counts upon market volatility D) cannot be diversity away

1. The defense characteristic heat is ________________. A) the trend line representing the security"s propensity to breakthrough or decline in the market over some period of time B) the "best fit" line representing the regression of the market"s excess return on the defense excess returns over some duration of time C) an additional term because that the resources allocation heat representing the set of finish portfolios that deserve to be constructed by combining the security with T-bill holdings D) nobody of the over answers is correct

1. Which among the complying with statement is no correct?A) Minimum Variance portfolio has the lowest risk among all portfolios along the investment possibility set.B) solitary index design assume the security co-moves through one single factor.C) Given different level of threat aversion and also hold whatever else the same, offered the investment opportunity collection of risky portfolios, investors must invest in a portfolio the he/she deems proper for his risk tolerance level.D) Investor have to not invest in any kind of portfolio the lies below the Minimum Variance portfolio.E) nobody of the above

C) Given different level of hazard aversion and also hold everything else the same, provided the investment opportunity set of risky portfolios, investors have to invest in a portfolio the he/she deems suitable for his threat tolerance level.

1. Which one of the following statement is not correct?A) A security"s beta coefficient will certainly be an unfavorable if that is returns room negatively associated with sector index returns.B) some diversification benefits deserve to be accomplished by combine securities in a portfolio as lengthy as the correlation between the securities is less than 1C) The ax excess-return describes the difference in between the price of return ~ above a risky asset and also the risk-free rateD) You space considering including a brand-new security to your portfolio. In order to decide whether you should add the defense you require to know the security"s expected return, risk and also correlation through your portfolio.E) If a risky portfolio is composed of the a bond and a stock, then investor with higher degree of hazard aversion have to invest much more in the bond.

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E) If a risky portfolio is composed of the a bond and also a stock, then investor with greater degree of hazard aversion must invest more in the bond.

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Principles of Microeconomics4th EditionN. Gregory Mankiw

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