^{Please answer all if not dont take}

^{Question 1: According to the CAPM, which of the following is false regarding the market portfolio?}

^{a. All securities in the market portfolio are held in proportion to their market values}

^{b. It includes all risky assets in the world.}

^{c. it is always the minimum-variance portfolio on the efficient frontier}

^{d. it lies on the efficient frontier.}

^{e. None of the above.}

^{Question 2: According to the CAPM:}

^{a. An investor who is risk adverse should hold allocate most of his assets in the risk-free asset.}

^{b. All investors who take on risk will hold the identical portfolios of risky assets}

^{c. A stock with high risk, measured as standard deviation of returns, will have high expected returns in equilibrium}

^{d. Individual investors are price setters}

^{e. None of the above}

^{Question 3: As the number of stocks in a portfolio increases, the portfolio systematic risk___}

^{a. decreases at an increasing rate}

^{b. decreases at a decreasing rate}

^{c. decreases at an indiscriminate rate}

^{d. increases}

^{e. may increase or decrease}

^{Question 4: Assume that a potential project has a 75% chance of doubling your investment in a year and a 25% chance of halving your investment in a year. What is the standard deviation of the rate of return on this investment?}

^{a. 10.31%}

^{b. 31.11%}

^{c. 47.81%}

^{d. 65.95}

^{e. none of the above}

^{Question 5: Assume the CAPM holds. The expected return on the market is 18% and risk-free rate of 5%. What is the expected return of a stock with a beta of 0.9?}

^{a. 10.4%}

^{b. 14.4%}

^{c. 15.4%}

^{d. 16.7%}

^{e. not enough information}

^{Question 6: Consider a single index model, the alpha of a stock is 2%, the beta is 1.1, the expected market return is 12%, and the risk-free rate is 1%. What is the expected return of the stock?}

^{a. 11.2%}

^{b. 14%}

^{c. 13.2%}

^{d. 15.1%}

^{e. not enough information}