Question
1. What does the market risk premium mean? Group of answer choices: a) The risk-free rate b) The relative performance of U.S. stocks vs. those
1. What does the market risk premium mean? Group of answer choices:
a) The risk-free rate
b) The relative performance of U.S. stocks vs. those of other countries
c) The expected return of the S&P 500 over the next year
d) The extra return an investor expects for accepting the risk of the S&P 500
e) The CAPM required return on an investment minus the risk-free rate
2. Your portfolio consists of two assets: $10,500 of Intel's corporate bonds and $15,700 of Microsoft stock. The standard deviations of returns for Intel's bonds and Microsoft stock are 12% and 27%, respectively. The correlation between these two investments is 0.33. What is the standard deviation of your portfolio?
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