$1.$ Recommended portfolio management policy uses aspects of both the "Traditional approach" & "Modern Portfolio theory". Which of the following would not be one of these factors:

Select one:

a$.$ Determines how much risk you are willing to bear

b$.$ Uses beta to keep portfolios at acceptable levels of risk

c$.$ Seeks to diversify between different types of securities & industry lines

d$.$ Evaluates alternative portfolios to select the highest return for the given level of acceptable risk

e$.$ Pays no attention to correlation of returns between securities

$2.$ The slope of the Security market line is provided by:

Select one:

a$.$ Expected returns for all efficient portfolios

b$.$ The price of risk for the market

c$.$ The expected return of the market plus it's beta

d$.$ The expected return for an asset plus it's beta

$3.$ In regards of the "Portfolio Risk$-$Return trade$-$off", which of the following is false:

Select one:

a$.$ The intercept is the 'risk$-$free rate'

b$.$ Is a positive relationship between the risk associated with a given investment & it's expected return

c$.$ The risk$-$free rate is the return an investor can earn on a risk$-$free investment, such as a Commonwealth Treasury Note

d$.$ Inefficient portfolios will always give a negative risk$-$return profile, because of the negative betas & correlations

$4.$ The difference between the return required for the risk level as measured by CAPM, and the actual return of the security is called:

Select one:

a$.$ Alpha

b$.$ Sharpe ratio

c$.$ Beta co$-$efficient

d$.$ Overpriced security

$5.$ Suppose a security$/$share with a Beta of $1\mathrm{.}25$ is offering an expected return of $15\%,$ yet according to the Security Market Line $($SML$),$ the expected return should be $13\%.$ This security$/$share is therefore:

Select one:

a$.$ Overpriced

b$.$ This expected return is not obtainable

c$.$ Underpriced

d$.$ The return needs to be recalculated as the beta used is most likely incorrect

$6.$ A security$/$share that plots below the SML & gives the investor a negative abnormal return has:

Select one:

a$.$ Negative Alpha

b$.$ Negative expected return

c$.$ A negative market premium

d$.$ Negative Beta

$7.$ If there is no relationship between the rates of return of two assets over time, these assets are:

a$.$ Uncorrelated

b$.$ Perfectly negatively correlated

c$.$ Perfectly correlated

d$.$ Negatively correlated