If a risk-free asset exists, a rational investor who dislikes risk should always allocate her money between the risk-free asset and minimum variance portfolio to achieve the best Sharpe ratio.Is the above statement True or False? Give explanations.

A company has experienced its first positive earnings growth in 10 years. The share price, however, dropped by 5% immediately after the announcement, which shows that the share market where the company is listed is inefficient. Is the above statement true or false? Give explanations.

Consider an investor with the following portfolio: (1) long position in stock F, (2) a loan from the bank (at the risk-free rate) that fully funds the purchase of stock F, (3) a long position in a futures contract with stock F as underlying that expires on the same date when loan repayment is due. If the futures contract is priced fairly, the expected cash flow at futures maturity is $0.Is the above statement True or False? Give explanations.

When using the duration formula to approximate the dollar change in price of the bond after a change in yields, the calculated change in price will always be lower than the actual change in price. In other words, the formula will always understate both the amount by which the price is increased following decreases in the yield, and the amount by which the bond price is reduced following yield increases. Is the above statement True or False? Give explanations.

Consider a forward contract on Euros with a forward rate of $1.80. On the maturity date, the long party would pay $1.8 million AUD in exchange for 1 million Euros from the short party. If Shane wants to speculate on the value of the Euro, and believes the Euro will go down in value, he should enter a long position on this forward contract.Is the above statement true or false? Give explanations.

Defensive industries have below-average sensitivity to state of economy

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In a covered call option trading strategy, trader takes a long position in the call contract.

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At the maturity stage, the companies in an industry experience high growth and pay out zero or small amount of dividends.

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