plz answer all the questions and will rate 5stars.

If the expected rate of return on a stock is 12% and a risk-free (treasury) security yields 5%, what must be the risk premium for this stock?

7%

12%

0%

5%

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In which of the following situations would you get the largest reduction in risk by spreading your portfolio across two stocks?

multiple_choice_question 9858442

<p>In which of the following situations would you get the largest reduction in risk by spreading your portfolio across two stocks?</p>

In which of the following situations would you get the largest reduction in risk by spreading your portfolio across two stocks?

The stock returns vary with each other towards the same direction.

It depends on the returns of these stocks.

The stock returns are independent.

The stock returns vary against each other.

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Why do stock market investors appear not to be concerned with unique (firm specific) risks when calculating expected rates of return?

multiple_choice_question 9858447

<p>Why do stock market investors appear not to be concerned with unique (firm specific) risks when calculating expected rates of return?</p>

Why do stock market investors appear not to be concerned with unique (firm specific) risks when calculating expected rates of return?

Risk premium for risky assets includes a component to compensate for unique risk.

They can build portfolios with zero total risk.

There is no method to quantify unique risks.

Unique risks can be eliminated through diversification.

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What is the approximate standard deviation of returns if over the past four years an investment returned 8%, -12%, -13% and 15%?

multiple_choice_question 9858455

<p>What is the approximate standard deviation of returns if over the past four years an investment returned 8%, -12%, -13% and 15%? </p>

What is the approximate standard deviation of returns if over the past four years an investment returned 8%, -12%, -13% and 15%?

11.26%

13.26%

10.26%

12.26%

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multiple_choice_question 9858684

<p>You wish to invest in a portfolio of stocks A and B. The risk free rate is 4%.</p> <p> A B</p> <p>Expected return (%) 10 20</p> <p>Volatility (standard deviation) (%) 15 25</p> <p>Correlation coefficient between returns 0.3</p> <p>What's the standard deviation of a portfolio with 30% in stock A?</p>

You wish to invest in a portfolio of stocks A and B. The risk free rate is 4%.

A B

Expected return (%) 10 20

Volatility (standard deviation) (%) 15 25

Correlation coefficient between returns 0.3

What's the standard deviation of a portfolio with 30% in stock A?

20.3%

19.3%

18.3%

21.3%

6 1

The standard deviations of individual stocks are generally higher than the standard deviation of the market portfolio for which of the following reasons?

multiple_choice_question 9858705

<p>The standard deviations of individual stocks are generally higher than the standard deviation of the market portfolio for which of the following reasons?</p>

The standard deviations of individual stocks are generally higher than the standard deviation of the market portfolio for which of the following reasons?

Individual stocks do not have uniques risk.

Individual stocks have more systematic risks.

Individual stocks have no diversification of risk.

Individual stocks offer higher returns.

7 1

The risk reduction through diversification in a portfolio of two stocks

multiple_choice_question 9858707

<p>The risk reduction through diversification in a portfolio of two stocks</p>

The risk reduction through diversification in a portfolio of two stocks

a. increases as the correlation between the stocks declines

b. decreases as the correlation between the stocks rises

both statements are correct

none of the statements are correct