Question
Hey, you answered some questions a while ago but 5 of them were wrong. Is that possible for you make them right? Here are the
Hey, you answered some questions a while ago but 5 of them were wrong. Is that possible for you make them right? Here are the questions: Red highlighting means wrong. QUESTION 1 An implication of the efficient markets is that __________. 1. high book to market ratio stocks are consistently better performers 2. low beta stocks are consistently overpriced 3. stock prices will appear to follow a random walk 4. growth stocks are better buys than value stocks 1 points QUESTION 2 Empirical tests of the strong-form version of the efficient market hypothesis indicate that ______________ are generally able to achieve superior returns. 1. hedge fund managers 2. professional money managers 3. stock exchange specialists 4. company insiders 1 points QUESTION 3 Investors following what other investors are buying or selling is an example of _________. 1. Herding 2. mental accounting 3. overconfidence 4. loss aversion 1 points QUESTION 4 Some researchers have found that portfolios of stocks with low P/E ratios ______________. 1. outperform stocks with high P/E ratios 2. underperform stocks with high P/E ratios 3. tend to have the same returns as stocks with high P/E ratios 4. are uncorrelated with returns for high P/E stocks 1 points QUESTION 5 Some researchers have found that portfolios of stocks with small market values ______________. 1. outperform stocks with large market values 2. underperform stocks with large market values 3. tend to have the same returns as stocks with large market values 4. are uncorrelated with returns for large market value stocks 1 points QUESTION 6 The finding that men trade far more actively than women is related to the behavioral finance study of ______________. 1. market inefficiency 2. conservatism 3. mental accounting 4. overconfidence 1 points QUESTION 7 The value or book-to-market effect refers to the finding that firms with high ratios of book value to market value (B/M) (or similarly low ratios of market value to book value (M/B)) tend to have annual returns ______________ returns for firms with lower ratios. 1. less than 2. greater than 3. equal to 4. unrelated to 1 points QUESTION 8 A portfolio on the capital allocation or capital market line with returns greater than the returns on the market or optimal risky portfolio represents a _____________. 1. borrowing portfolio (borrow at the risk-free rate and then buy the risky asset on margin) 2. lending porfolio (buy the risk-free asset, which is lending to the government, in combination with the risky asset) 3. unacheivable portfolio 1 points QUESTION 9 A risky portfolio has an expected rate of return of 15% and a standard deviation of 20%. The Treasury bill rate is 4%. What is the Sharpe (reward-to-volatility) ratio for the portfolio? 1. 0.55 2. 0.75 3. 0.80 4. 0.95 S = [E(r) - rf]/? Your Risky Portfolio: SP = [0.15 ? 0.04]/0.20 = 0.55 1 points QUESTION 10 A stock has an estimated rate of return of 15.5% and a beta of 1.5. The market expected rate of return is 10% and the risk-free rate is 3%. The alpha of the stock is ______________. 1. -2% 2. 0% 3. 2% 4. 3% Alpha = 15.5 ? [3+1.5*(10-3)]= 2 1 points QUESTION 11 According to the CAPM, overvalued securities will have ______________. 1. large betas 2. positive alphas 3. zero alphas 4. negative alphas 1 points QUESTION 12 Investors should use a portfolio approach to investing to ____________. 1. reduce risk 2. monitor risk 3. eliminate risk 1 points QUESTION 13 Portfolio managers who wish to maximize risk-adjusted returns will seek to invest more in stocks with __________ . 1. low values of Jensen's alpha 2. zero values of Jensen's alpha 3. high values of Jensen's alpha 1 points QUESTION 14 Security A has a standard deviation of .12 and a correlation coefficient with the market of .6, while security B has a standard deviation of .14 and a correlation coefficient with the market of .5. Which security has a higher beta if the market standard deviation is .13? 1. A=0.5538 2. B=0.538 ? = Correlation Coefficient Standard Deviation of Stock Returns between Market and Stock /Standard Deviation of Market Returns Not enough information 1 points QUESTION 15 The beta of the market portfolio is _______. 1. -1.0 2. 0.0 3. 1.0 4. It has no beta. 1 points QUESTION 16 The line depicting the risk and return of portfolio combinations of the risk-free asset and the market portfolio is the ___________. 1. capital allocation line 2. capital market line 3. security market line 4. security characteristic line 1 points QUESTION 17 Two assets are available for you to form an investment portfolio: the risk-free asset has a rate of return of 5% and the market portfolio has an expected return of 15%. How much should you invest in the risk-free asset to achieve a total portfolio expected return of 9%? 1. 40% 2. 50% 3. 60% 4. 70% 0.09=0.15w+(1-w)0.05=0.04 1 points QUESTION 18 What is the CAPM estimated rate of return for a stock with a beta of 1.5 when the market expected rate of return is 10% and the risk-free rate is 3%? 1. 10.5% 2. 12.0% 3. 13.5% 4. None of the above 0.03+(.10-.03)1.5=0.135 1 points QUESTION 19 Which one of the following stocks is relatively more risky when held in a well-diversified portfolio? Stock XYZ: standard deviation = .12 , beta = .5 Stock ABC: standard deviation = .13 , beta = .4 1. XYZ because its beta is higher. 2. XYZ because its standard deviation is higher. 3. ABC because its beta is lower. 4. ABC because its standard deviation is lower. 1 points QUESTION 20 With respect to the CAPM based model used to predict returns for a stock (shown on the security characteristic line), what is the estimated intercept term? 1. Alpha 2. Beta 3. Delta 4. Gamma
QUESTION 1 An implication of the efficient markets is that __________. 1. high book to market ratio stocks are consistently better performers 2. low beta stocks are consistently overpriced 3. stock prices will appear to follow a random walk 4. growth stocks are better buys than value stocks 1 points QUESTION 2 Empirical tests of the strong-form version of the efficient market hypothesis indicate that ______________ are generally able to achieve superior returns. 1. hedge fund managers 2. professional money managers 3. stock exchange specialists 4. company insiders 1 points QUESTION 3 Investors following what other investors are buying or selling is an example of _________. 1. Herding 2. mental accounting 3. overconfidence 4. loss aversion 1 points QUESTION 4 Some researchers have found that portfolios of stocks with low P/E ratios ______________. 1. outperform stocks with high P/E ratios 2. underperform stocks with high P/E ratios 3. tend to have the same returns as stocks with high P/E ratios 4. are uncorrelated with returns for high P/E stocks 1 points QUESTION 5 Some researchers have found that portfolios of stocks with small market values ______________. 1. outperform stocks with large market values 2. underperform stocks with large market values 3. tend to have the same returns as stocks with large market values 4. are uncorrelated with returns for large market value stocks 1 points QUESTION 6 The finding that men trade far more actively than women is related to the behavioral finance study of ______________. 1. market inefficiency 2. conservatism 3. mental accounting 4. overconfidence 1 points QUESTION 7 The value or book-to-market effect refers to the finding that firms with high ratios of book value to market value (B/M) (or similarly low ratios of market value to book value (M/B)) tend to have annual returns ______________ returns for firms with lower ratios. 1. less than 2. greater than 3. equal to 4. unrelated to 1 points QUESTION 8 A portfolio on the capital allocation or capital market line with returns greater than the returns on the market or optimal risky portfolio represents a _____________. 1. borrowing portfolio (borrow at the risk-free rate and then buy the risky asset on margin) 2. lending porfolio (buy the risk-free asset, which is lending to the government, in combination with the risky asset) 3. unacheivable portfolio 1 points QUESTION 9 A risky portfolio has an expected rate of return of 15% and a standard deviation of 20%. The Treasury bill rate is 4%. What is the Sharpe (reward-to-volatility) ratio for the portfolio? 1. 0.55 2. 0.75 3. 0.80 4. 0.95 S = [E(r) - rf]/ Your Risky Portfolio: SP = [0.15 - 0.04]/0.20 = 0.55 1 points QUESTION 10 A stock has an estimated rate of return of 15.5% and a beta of 1.5. The market expected rate of return is 10% and the risk-free rate is 3%. The alpha of the stock is ______________. 1. -2% 2. 0% 3. 2% 4. 3% Alpha = 15.5 - [3+1.5*(10-3)]= 2 1 points QUESTION 11 According to the CAPM, overvalued securities will have ______________. 1. large betas 2. positive alphas 3. zero alphas 4. negative alphas 1 points QUESTION 12 Investors should use a portfolio approach to investing to ____________. 1. reduce risk 2. monitor risk 3. eliminate risk 1 points QUESTION 13 Portfolio managers who wish to maximize risk-adjusted returns will seek to invest more in stocks with __________ . 1. low values of Jensen's alpha 2. zero values of Jensen's alpha 3. high values of Jensen's alpha 1 points QUESTION 14 Security A has a standard deviation of .12 and a correlation coefficient with the market of .6, while security B has a standard deviation of .14 and a correlation coefficient with the market of .5. Which security has a higher beta if the market standard deviation is .13? 1. A=0.5538 2. B=0.538 = Correlation Coefficient Standard Deviation of Stock Returns between Market and Stock /Standard Deviation of Market Returns Not enough information 1 points QUESTION 15 The beta of the market portfolio is _______. 1. -1.0 2. 0.0 3. 1.0 4. It has no beta. 1 points QUESTION 16 The line depicting the risk and return of portfolio combinations of the risk-free asset and the market portfolio is the ___________. 1. capital allocation line 2. capital market line 3. security market line 4. security characteristic line 1 points QUESTION 17 Two assets are available for you to form an investment portfolio: the risk-free asset has a rate of return of 5% and the market portfolio has an expected return of 15%. How much should you invest in the risk-free asset to achieve a total portfolio expected return of 9%? 1. 40% 2. 50% 3. 60% 4. 70% 0.09=0.15w+(1-w)0.05=0.04 1 points QUESTION 18 What is the CAPM estimated rate of return for a stock with a beta of 1.5 when the market expected rate of return is 10% and the risk-free rate is 3%? 1. 10.5% 2. 12.0% 3. 13.5% 4. None of the above 0.03+(.10-.03)1.5=0.135 1 points QUESTION 19 Which one of the following stocks is relatively more risky when held in a well-diversified portfolio? Stock XYZ: standard deviation = .12 , beta = .5 Stock ABC: standard deviation = .13 , beta = .4 1. XYZ because its beta is higher. 2. XYZ because its standard deviation is higher. 3. ABC because its beta is lower. 4. ABC because its standard deviation is lower. 1 points QUESTION 20 With respect to the CAPM based model used to predict returns for a stock (shown on the security characteristic line), what is the estimated intercept term? 1. Alpha 2. Beta 3. Delta 4. Gamma 5. 6. An implication of the efficient markets is that __________. 7. Question 2 1 out of 1 points Empirical tests of the strongform version of the efficient market hypothesis indicate that ______________ are generally able to achieve superior returns. 8. Question 3 1 out of 1 points Investors following what other investors are buying or selling is an example of _________. 9. Question 4 1 out of 1 points Some researchers have found that portfolios of stocks with low P/E ratios ______________. 10. Question 5 1 out of 1 points Some researchers have found that portfolios of stocks with small market values ______________. 11. Question 6 1 out of 1 points The finding that men trade far more actively than women is related to the behavioral finance study of ______________. 12. Question 7 0 out of 1 points The value or booktomarket effect refers to the finding that firms with high ratios of book value to market value (B/M) (or similarly low ratios of market value to book value (M/B)) tend to have annual returns ______________ returns for firms with lower ratios. 13. Question 8 0 out of 1 points A portfolio on the capital allocation or capital market line with returns greater than the returns on the market or optimal risky portfolio represents a _____________. 14. Question 9 1 out of 1 points A risky portfolio has an expected rate of return of 15% and a standard deviation of 20%. The Treasury bill rate is 4%. What is the Sharpe (rewardtovolatility) ratio for the portfolio? 15. Question 10 1 out of 1 points A stock has an estimated rate of return of 15.5% and a beta of 1.5. The market expected rate of return is 10% and the riskfree rate is 3%. The alpha of the stock is ______________. 16. Question 11 1 out of 1 points According to the CAPM, overvalued securities will have ______________. 17. Question 12 1 out of 1 points Investors should use a portfolio approach to investing to ____________. 18. Question 13 1 out of 1 points Portfolio managers who wish to maximize riskadjusted returns will seek to invest more in stocks with __________ . 19. Question 14 1 out of 1 points Security A has a standard deviation of .12 and a correlation coefficient with the market of .6, while security B has a standard deviation of .14 and a correlation coefficient with the market of .5. Which security has a higher beta if the market standard deviation is .13? 20. Question 15 1 out of 1 points The beta of the market portfolio is _______. 21. Question 16 0 out of 1 points The line depicting the risk and return of portfolio combinations of the riskfree asset and the market portfolio is the ___________. 22. Question 17 0 out of 1 points Two assets are available for you to form an investment portfolio: the riskfree asset has a rate of return of 5% and the market portfolio has an expected return of 15%. How much should you invest in the riskfree asset to achieve a total portfolio expected return of 9%? 23. Question 18 1 out of 1 points What is the CAPM estimated rate of return for a stock with a beta of 1.5 when the market expected rate of return is 10% and the riskfree rate is 3%? 24. Question 19 1 out of 1 points Which one of the following stocks is relatively more risky when held in a welldiversified portfolio? Stock XYZ: standard deviation = .12 , beta = .5 Stock ABC: standard deviation = .13 , beta = .4 25. Question 20 0 out of 1 points With respect to the CAPM based model used to predict returns for a stock (shown on the security characteristic line), what is the estimated intercept term? aStep by Step Solution
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