15. How the beta of a stock can be calculated?

1. By monitoring price of the stock
2. By monitoring rate of return of the stock
3. By comparing the changes in the stock market price to the changes in the stock market index
4. All of the given options

16. Which of the following formula relates beta of the stock to the standard deviation?

A. Covariance of stock with market * variance of the market

B. Covariance of stock with market / variance of the market

C. Variance of the market / Covariance of stock with market

D. Slope of the regression line

17. A beta greater than 1 for a stock shows:

A. Stock is relatively more risky than the market

B. If the market moves up by 10% the stock will move up by 12%

C. As the market moves the stock will move in the same direction

D. All of the given options

18. If stock is a part of totally diversified portfolio then its company risk must be equal to:

A. 0 B. 0.5 C. 1 D. -1

19. If risk and return combination of any stock is above the SML, what does it mean?

1. It is offering lower rate of return as compared to the efficient stock
2. It is offering higher rate of return as compared to the efficient stock
3. Its rate of return is zero as compared to the efficient stock
4. It is offering rate of return equal to the efficient stock

20. An arbitrage opportunity exists if an investor can construct a __________investment portfolio that will yield a sure profit.

A. Positive B. Negative C. Zero D. All of the given options