QUESTION 5

The expected return on Johns complete portfolio is 15%. The volatility of Johns complete portfolio is 25%. The risk free rate is 5%. What is Johns coefficient of risk aversion?

		2.8
		1.6
		1.2
		2.5

QUESTION 6

The expected return on the risky portfolio is 10%. The risk-free rate, as well as the investor's borrowing rate, is 4%. The standard deviation of return on the risky portfolio is 15%. If the standard deviation on the complete portfolio is 20%, the expected return on the complete portfolio is _________.

		6.25%
		5.69 %
		11.98%
		16.25%

QUESTION 7

Marys coefficient of risk aversion A is 1. This means that

		For each unit of volatility, Mary requires an expected return equal to 100%.
		For each unit of variance, Mary requires an expected return equal to 100%.
		For each unit of volatility, Mary requires a risk premium equal to 100%.
		For each unit of variance, Mary requires a risk premium return equal to 100%.

QUESTION 8

My complete portfolio includes a risk-free asset and a risky portfolio. The risk premium of my complete portfolio is 5%. If I want to decrease the amount of risk premium, I must_____________

		triple the amount invested in the risk free asset
		decrease the amount invested in the risky portfolio
		do nothing
		triple the amount invested in the risky portfolio