An investor puts 55% of his money into a risky asset offering a 12% return with a standard deviation of returns of 9%, and the balance of his funds in a risk-free asset offering 6%. What is the expected return of his portfolio? Select one: a. 8.0% O b. 9.9% O c. 10.7% d. 9.3% O e. 12.0% Your broker mailed you your year-end statement. You have $25,000 invested in Dow Chemical, $11,000 tied up in GM, $36,000 in Microsoft stock, and $23,000 in Nike. The betas for each of your stocks are 1.85 for Dow, 1.62 for GM, 3.29 for Microsoft, and 0.96 for Nike. What is the beta of your portfolio Select one: a. 2.15 b. 1.93 C. 1.70 di 1.46 John's financial goal is to save $25,500 every year for the next 15 years. He will be investing in an instrument with a stated interest rate of 6%. His first deposit will be at the start of the year. How much will he have in his account at the end of 15 years? Select one: O a. $581,900 O b. $616,814 O c. $629,150 O d. $593,538 Identify the FALSE statement below. Select one: O a. A dollar received one year from now will be worth more than a dollar received today. b. Compounding essentially means earning interest on interest on an initial balance c. A dollar received one year from now will be worth more than a dollar received two years from now. O d. Perpetuities pay an equal payment forever. Portfolio X is well-diversified. The portfolio has an expected return of 18% and a beta of 1. The risk-free rate is 8%, and the return for the market is 16%. Select one: O a. Portfolio X is overvalued. O b. Portfolio X is fairly valued. c. Portfolio X is undervalued. O O d. Further information is needed to answer this question Two investments offer the same expected returns of 15%. Assuming a normal probability distribution, Investment X has a standard deviation of 48.5% and Investment Y's standard deviation is 41%. Based on this data, which one of the following statements is true? Select one: a. Both investments have the same level of risk. b. Investment Y is riskier than Investment X. c. Investment X is riskier than Investment Y. d. There is not enough data to determine which Investment is riskier. d In the years ahead the market risk premium, (KM-KRF), is expected to fall, while the risk-free rate, Krf, is expected to remain at current levels. Given this forecast, which of the following statements is most correct? Select one: O a. The required return will fall for all stocks but will fall more for stocks with lower betas O b. The required return will increase for stocks with a beta less than 1.0 and will decrease for stocks with a beta greater than 1.0. o c. The required return will fall for all stocks but will fall less for stocks with lower betas. d. The required return for all stocks will fall by the same amount. You just inherited $450,000 from your late Uncle Joe and invested it in an account yielding 7% per annum. How many long will it take your investment to grow to $2,500,0002 Select one: O a. 14.27 years O b. 22.28 years c.25.34 years d. 2.28 years You have the opportunity to buy a perpetuity that pays $1,000 annually. Your required rate of return on this investment is 8 percent. You should be essentially indifferent to buying or not buying the investment if it were offered at a price of Select one: o a. $8,333.33 O b. $12,500 c. $1.250 O d. $125 Which of the following statements is most correct? of Select one: a. Future value and present value are discounted by an interest rate O b. Future value compounds by an interest rate and present value discounts by an interest rate c. Future value and present value are compounded by an interest rate d. Future value discounts by an interest rate and present value compounds by an interest rate