Question
I need help with this questions. Thank you! 1.Using the following, what's the expected return for the portfolio? Portfolio Stock A Value: 2,000 Expected Return:
I need help with this questions. Thank you!
1.Using the following, what's the expected return for the portfolio?
Portfolio
Stock A
Value: 2,000
Expected Return: 15 percent
Stock B
Value: 8,000
Expected Return: 20 percent
A. 16 percent
B. 19 percent
C. 17 percent
D. 18 percent
2. Eliminating unsystematic risk by holding a portfolio of different assets reflects
A. portfolio variance spreading.
B. beta coefficiency.
C. the principle of diversification.
D. the elimination of systematic risk
3.Out of the following asset classes, which of the following would you expect to the have the smallest variance?
A. Long-term corporate bonds
B. Small company stocks
C. Large company stocks
D. U.S. Treasury bills
4.Suppose the firm, Elena, Inc., has a major lawsuit pending against it. Everyone expects the company to win the suit, but to everyone's surprise, the firm loses. As far as the firm's stock price goes, the news is likely to have a/an
A. immediate and slightly negative effect.
B. slow and slightly negative effect.
C. immediate and significantly positive effect.
D. immediate and significantly negative effect.
5.Aimee is the owner of a stock with annual returns of 27 percent, -32 percent, 11 percent, and 23 percent for the last four years, respectively. She thinks the stock may be able to achieve a return of 50 percent or more in a single year. What's the probability that your friend is correct?
A. Greater than 2.5 percent but less than 16 percent
B. Greater than 1 percent but less than 2.5 percent
C. Greater than .5 percent but less than 1 percent
D. Greater than 16 percent
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