CSL, a pharmaceutical company, has a beta of 1.1, and Woolworths has a beta of 1.0. The risk-free rate of interest is 4% and the market risk premium is 6%. What is the required return of a portfolio with 50% of its money in CSL and the rest in Woolworths?

Select one:

a.12.4%

b.9.9%

c.10.3%

d.11.1%

Clear my choice

Question26

Which one of the following is TRUE?

Select one:

a.Investors pay more for bonds with credit risk than they would for an otherwise identical default-free bonds.

b.Default risk of investment-grade-bonds is greater than that of speculative-bonds.

c.During times of uncertainty, credit spread narrows.

d.Yield to maturity of a defaultable bond is greater than expected return of investing in the bond.

Clear my choice

Question27

Assume that the average annual historical return for shares that comprise the Australian All Ordinaries index is 12%, and the standard deviation of returns is 20%. Based on these numbers what is a 95% prediction interval for 2020 returns?

Select one:

a.-20%, 35%

b.-15%, 35%

c.-28%, 52%

d.-10%, 40%