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13 A portfolio consists of 13 percent of Stock R, 53.1 percent of Stock S, and 33.9 percent of Stock T. Stock R has a beta of .30, Stock S has a beta of .85, and Stock T has a beta of 2.01. What is the portfolio beta? 0.5 points Multiple Choice eBook O 1.95 Print O 1.13 References O 1.09 O 1.05 O 1.1714 You plotted the monthly rate of return for two securities against time for the past 48 months. If the pattern of the movements of these two sets of returns rose and fell together the majority, but not all, of the time, then the securities have 0.5 points Multiple Choice BOOK O no correlation at all. Print O a weak negative correlation. References O a strong negative correlation. O a strong positive correlation. O a perfect positive correlation.15 If there is no diversication benefit derived from combining two risky stocks into one portfolio, then the 0.5 points Multiple Choice eBook O returns on the two stocks must move perfectly in sync with one another returns on the two stocks must move perfectly opposite of one another, References stocks must have a zero correlation. portfolio is equally weighted between the two stocks. 0000 two stocks are completely unrelated to one another. 16 0.5 points References If a stock portfolio is well diversied, then the portfolio variance Multiple Choice O 0000 must be equal to or greater than the variance of the least risky stock in the portfolio. will be a weighted average of the variances of the individual securities in the portfolio. will equal the variance ofthe most volatile stock in the portfolio. will be an arithmetic average of the variances of the individual securities in the portfolio. may be less than the variance ofthe least risky stock in the portfolio. 17 Assume two securities are negatively correlated. If these two securities are combined into an equally weighted portfolio, the portfolio standard deviation must be 0.5 points Multiple Choice eBook O equal to the standard deviation of the overall market. Print O equal to the arithmetic average of the standard deviations of the individual securities. References O equal to zero. O less than the weighted average of the standard deviations of the individual securities. O equal to or greater than the lowest standard deviation of the two securities.18 A security that is fairly priced will have a return that lies the security market line. 0.5 points Multiple Choice eBook O below Print O on or below References O on O on or above O above19 Alejandro has a portfolio with a beta of 1.42 but wants to lower his investment risk. Adding which one of the following securities to his portfolio will most assuredly lower the risk of the portfolio? 0.5 points Multiple Choice eBook O A stock that has a covariance with the market of .73 Print O A security that has a standard deviation of 9 percent References O A security with a beta of 1.56 O U.S. Treasury bills O A mix of small-company and large-company stocks20 Assume you are looking at a security market line graph. Where would an overpriced stock with a beta of .98 plot on that graph? 0.5 points Multiple Choice eBook O To the right of the market and below the security market line Print O To the left of the market and below the security market line References O To the right of the market and above the security market line O To the left of the market and above the security market line O To the right of the market on the security market line12 A portfolio worth $5,500 is invested in Stocks A and B plus a risk-free asset. A total of $2,500 is invested in Stock A with a beta of 1.27. Stock B has a beta of .89. How much needs to be invested in Stock B if the goal is to create a portfolio that will mimic the entire market? .5 oints Multiple Choice eBook O -$894.20 Print n References O $2,266.67 O $1.482.08 O $2,612.36 O $3.408.1511 Kalana owns a portfolio comprising of 1,700 shares of Stock X, 3,100 shares of Stock Y, and 1,000 shares of Stock Z. The current shares prices of Stocks X, Y and Z are $13.47, $63.71, and $34.95, respectively. Their respective expected returns are a loss of 5 percent, a gain of 8.5 percent, and a gain of 3.5 percent. What is the expected return of Kalana's portfolio? 0.5 points Multiple Choice eBook O 10.28% Print References O 3.68% O 7.5% O 2.33% O 6.61%