Question 21:

Which of the following should earn the highest expected return based on CAPM?

A. a market portfolio with returns similar to the overall market

B. a portfolio with a beta of 1.25 and a standard deviation of 1.50

C. a portfolio with a beta of 1.17 and a standard deviation of 1.60

Group of answer choices

C

B

A

Question 22

You own a portfolio that has $1,800 invested in Stock A and $6,200 invested in Stock B.

The expected returns on these stocks are 15 percent and 23 percent, respectively.

The expected return on the portfolio is ______%. Round-off your answer to 1 decimal point, e.g., if 4.572%, input 4.6.

Question 23

Jessica observes a stock price of $20.75. She expects a dividend growth rate of 5%, and the most recent dividend was $4. The required return is ________%.

Group of answer choices

35.4

20.2

25.2

45.5

40.4

30.3

Question 24

Assume that the market return=14% and risk-free rate=5%.

If an asset has a beta of 0, its expected return is %.

If an asset has a beta of 1, its expected return is %.

Question 25

Consider a well-diversified portfolio.

Its _______________ risk is very small, and its total risk is essentially equivalent to its ______________ risk.

Group of answer choices

systematic; unsystematic

unsystematic; unsystematic

systematic; systematic

unsystematic; systematic