can someone please help me figure this out i want to learn how to solve these step by step please.

1. Scott believed Amazon stock was overpriced at the price of $500. He shorted 100 shares. The brokerage firm required an initial margin of 50% and a maintenance margin of 35%. The price, however, has been moving against Scott's belief. What is the threshold price above which Scott would receive a margin call? A. 577.78 B. 544.45 C. 555.56 D. 566.67 2. Evidence suggests that there may be _______ momentum and ________ reversal patterns in stock price behavior. A. short-run; long run B. short-run; short-run C. long-run; long-run D. long-run; short-run 3. If you are promised a nominal return of 12% on a 1-year investment, and you expect the rate of inflation to be 3%, what real rate do you expect to earn? A. 5.48% B. 8.74% C. 9% D. 12% 4. If CAPM is valid, which of the following statements is correct about the situation shown in the table below? Portfolio Expected return Standard deviation Risk-free 6% 0% Market 14% 20% A 15% 28% B 16% 26% A. This situation is impossible because portfolios A and B both are riskier than the market. B. This situation is impossible because portfolio A has a lower expected return than B, yet its standard deviation is higher than B. C. This situation is impossible because portfolio B's standard deviation is 6% higher than the market but its expected return is only 2% higher than the market. D. This situation is possible if the firm-specific risk of portfolio A is higher than that of B. 5. Consider the single factor APT. Portfolio A has a beta of 1.3 and an expected return of 21%. Portfolio B has a beta of .7 and an expected return of 17%. The risk-free rate of return is 8%. If you wanted to take advantage of an arbitrage opportunity, you should take a short position in portfolio __________ and a long position in portfolio _________. A. B; B B. A; A C. A; B D. B; A 3 6. Security X has an expected rate of return of 13% and a beta of 1.15. The risk-free rate is 5%, and the market expected rate of return is 15%. According to the capital asset pricing model, security X is _________. A. underpriced B. fairly priced C. overpriced D. none of these answers 7. If all investors become more risk averse, the SML will _______________ and stock prices will _______________. A. have the same intercept with a flatter slope; rise B. shift upward; rise C. shift downward; fall D. have the same intercept with a steeper slope; fall 8. The risk-free rate is 4%. The expected market rate of return is 11%. If you expect stock X with a beta of .8 to offer a rate of return of 12%, then you should _________. A. sell short stock X because it is underpriced B. buy stock X because it is overpriced C. buy stock X because it is underpriced D. sell short stock X because it is overpriced 9. If the beta of the market index is 1 and the standard deviation of the market index increases from 12% to 18%, what is the new beta of the market index? A. 1.5 B. .8 C. 1 D. 1.2 10. Benjamin estimated a Fama and French (2015) five-factor model for HOT over the past five years and obtained the following results on the regression coefficients. Which of the following statement about the firm characteristics is correct? Intercept MKTRF SMB HML RMW CMA A. B. C. D. Coefficients 0.273 1.167 -0.429 -0.780 0.204 0.249 t Stat 0.330 5.251 -1.126 -1.874 0.368 0.353 P-value 0.742 0.000 0.264 0.065 0.714 0.725 HOT has invested conservatively in the past five years. HOT appears a value company. HOT appears a small company. HOT does not appear profitable in the past five years. 4 Lower 95% -1.380 0.723 -1.189 -1.611 -0.902 -1.160 Upper 95% 1.927 1.610 0.331 0.051 1.310 1.658 11. If enough investors decide to purchase stocks, they are likely to drive up stock prices, thereby causing _____________ and ___________. A. expected returns to fall; risk premiums to rise B. expected returns to fall; risk premiums to fall C. expected returns to rise; risk premiums to fall D. expected returns to rise; risk premiums to rise 12. The semistrong form of the efficient market hypothesis implies that ____________ generate abnormal returns and ____________ generate abnormal returns. A. technical analysis cannot; fundamental analysis cannot B. technical analysis cannot; fundamental analysis can C. technical analysis can; fundamental analysis can D. technical analysis can; fundamental analysis cannot 13. An investor can design a risky portfolio based on two stocks, A and B. The standard deviation of return on stock A is 20%, while the standard deviation on stock B is 15%. The correlation coefficient between the returns on A and B is 0%. The standard deviation of return on the minimum-variance portfolio is _________. A. 12% B. 0% C. 6% D. 17% 14. You are considering investing $1,000 in a complete portfolio. The complete portfolio is composed of Treasury bills that pay 5% and a risky portfolio, P, constructed with two risky securities, X and Y. The optimal weights of X and Y in P are 60% and 40%, respectively. X has an expected rate of return of 14%, and Y has an expected rate of return of 10%. To form a complete portfolio with an expected rate of return of 11%, you should invest __________ of your complete portfolio in Treasury bills. A. 36% B. 19% C. 25% D. 50% 15. Megan believed Amazon stock was overpriced at the price of $500. She shorted 100 shares. The brokerage firm required an initial margin of 50% and a maintenance margin of 35%. The price, however, has been moving against Megan's belief. If Amazon price increases from $500 to $560, how much would Megan have to deposit in her margin account? A. $800 B. $500 C. $600 D. $700 5 16. Suppose that a stock portfolio and a bond portfolio have a zero correlation. This means that ______. A. the returns on the stock and bond portfolios tend to move together B. the returns on the stock and bond portfolios tend to move inversely C. the returns on the stock and bond portfolios tend to vary independently of each other D. the covariance of the stock and bond portfolios will be positive 17. Jonny can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 21% and a standard deviation of return of 39%. Stock B has an expected return of 14% and a standard deviation of return of 20%. The correlation coefficient between the returns of A and B is .4. The risk-free rate of return is 5%. The standard deviation of the returns on the optimal risky portfolio is _________. A. 21.4% B. 25.5% C. 22.3% D. 20.7% 18. On a standard expected return versus standard deviation graph, investors will prefer portfolios that lie to the _____________ of the current investment opportunity set. A. right and above B. left and above C. left and below D. right and below 19. You have the following rates of return for a risky portfolio for several recent years. Assume that the stock pays no dividends. Year 2009 2010 2011 2012 Beginning of year price $50.00 $55.00 $51.00 $54.00 # of shares bought or sold 1000 bought 500 bought 750 sold 750 sold What is the dollar-weighted return over the entire time period? A. 2.87% B. .74% C. 2.6% D. 2.21% 20. The holding-period return on a stock was 25%. Its ending price was $18, and its beginning price was $16. Its cash dividend must have been _________. A. $.25 B. $1 C. $2 D. $4 6 21. The Hawkman Fund has an expected return of 16% and a standard deviation of 20%. The riskfree rate is 4%. What is the reward-to-volatility ratio for the Hawkman Fund? A. .8 B. .6 C. 9 D. 1 22. Given the following data: Stock A has a standard deviation of 30%. Stock B has a standard deviation of 18%. The correlation coefficient between the two stocks is -1. What is the standard deviation of a portfolio of the two stocks with 60% invested in stock A? A. 18% B. 0% C. 10.8% D. 24% 23. Irrelevant 24. If the nominal rate of return on investment is 6% and inflation is 2% over a holding period, what is the real rate of return on this investment? A. 3.92% B. 4% C. 4.12% D. 6% 25. Your investment has a 20% chance of earning a 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance of losing 6%. What is your expected return on this investment? A. 12.8% B. 11% C. 8.9% D. 9.2% 7 26. Decreasing the number of stocks in a portfolio from 50 to 10 would likely ________________. A. increase the return of the portfolio B. increase the systematic risk of the portfolio C. increase the unsystematic risk of the portfolio D. decrease the variation in returns the investor faces in any one year 27. The arithmetic average of -11%, 15%, and 20% is ________. A. 15.67% B. 8% C. 11.22% D. 6.45% 28. You have an EAR of 9%. The equivalent APR with continuous compounding is _____. A. 8.47% B. 8.62% C. 8.88% D. 9.42% 29. Arbitrage is __________________________. A. an example of a risky trading strategy based on market forecasting B. an example of the law of one price C. the creation of riskless profits made possible by relative mispricing among securities D. a common opportunity in modern markets 30. What is the geometric average return over 1 year if the quarterly returns are 8%, 9%, 5%, and 12%? A. 8% B. 8.33 % C. 8.47% D. 8.5 % 31. A loan for a new car costs the borrower .8% per month. What is the EAR? A. .80% B. 6.87% C. 9.6% D. 10.03% 32. Which of the following correlation coefficients will produce the most diversification benefits? A. 0 B. -.6 C. -.9 D. .4 33. Beta is a measure of security responsiveness to _________. A. market risk B. firm-specific risk C. diversifiable risk D. unique risk 8