If an asset price declines, the investor with a _______ is exposed to the largest potential loss.

long call option

short futures contract

long futures contract

long put option

Which type of fund generally has the lowest average expense ratio?

hedge funds

indexed funds

actively managed international funds

actively managed bond fund

Value stocks usually exhibit ______ price-to-book ratios and ______ price-to-earnings ratios.

high; high

low; high

high; low

low; low

An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected return of 18% and a standard deviation of return of 20%. Stock B has an expected return of 14% and a standard deviation of return of 5%. The correlation coefficient between the returns of A and B is .50. The risk-free rate of return is 10%. The expected return on the optimal risky portfolio is _________.

11.8%

12.2%

14%

15.6%