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d. Decline or increase, depending on other factors. Stocks A, B, and C have the same expected return and standard deviation. The following table shows

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d. Decline or increase, depending on other factors. Stocks A, B, and C have the same expected return and standard deviation. The following table shows the correlations between the returns on these stocks. Given these correlations, the portfolio constructed from these stocks having the lowest risk is a portfolio: a. Equally invested in stocks A and B. b. Equally invested in stocks A and C. c. Equally invested in stocks B and C. d. Totally invested in stock C. The security market line depicts: a. A security's expected return as a function of its systematic risk. b. The market portfolio as the optimal portfolio or risky securities. c. The relationship between a security's return and the return on an index. d. The complete portfolio as a combination of the market portfolio and the risk-free asset. Within the context of the capital asset pricing model (CAPM), assume: Expected return on the market = 15%. Risk-free rate = 8%. Expected rate of return on XYZ security = 17%. Beta of XYZ security = 1.25. Which one of the following is correct? a. XYZ is overpriced. b. XYZ is fairly priced. c, XYZs alpha is 25%. d. XYZs alpha is .25%. What is the expected return of a zero-beta security? a. Market rate of return. b. Zero rate of return. c. Negative rate of return. d. Risk-free rate of return. According to CAPM, the expected rate of return of a portfolio with a beta of 1.0 and an alpha of 0 is: a. Between r_M and r_t. b. The risk-free rate r_f. c, B(r_M - r_t). d. The expected return on the market, r_M. The following table shows risk and return measures for two portfolios. When plotting portfolio R relative to the capital market line, portfolio R lies a. On the CML b. Below the CML. c. Above the CML. d. Insufficient data given Within the context of the capital asset pricing model (CAPM), assume: Expected return on the market = 15%. Risk-free rate = 8%. Expected rate or return on XYZ security = 17%. Beta of XYZ security = 1.2$. Which one of the following is correct? XYZ is overpriced. b. XYZ is fairly priced c. XYZ-s alpha is -.25%. d. XYTs alpha is 25%. WM is the expected return of 8 zero-beta security? Market rate of return b Zero rate of return c. Negative rate of return. d. Risk-free rate of return. According to CAPM. the expected fate of return of a portfolio with a beta of 1.0 and an alpha of 1 is a. Between tau_m and tau_f b. The risk free rate tau_f. c. B(tau_M-tau_f). d. The expected return on the market, tau_M. The following table shows risk and return measures for two portfolios. When plotting portfolio R relative to the capital market tine, portfolio R lies; a. On the CML. b. Below the CML. c. Above the CML. d insufficient data given

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