Question 81 pts

The benefits of portfolio diversification are highest when the individual securities have returns that

Group of answer choices

Vary indirectly with the rest of the portfolio

Are counter-cyclical

Are uncorrelated with the rest of the portfolio

Vary directly with the rest of the portfolio

Question 91 pts

Macro events only are reflected in the performance of the market portfolio because

Group of answer choices

Unique risks have been diversified away

Question 101 pts

If you were willing to bet that the overall stock market was heading up on a sustained basis, it would be logical to invest in

Group of answer choices

Stocks that plot below the security market line

Stocks with large amounts of unique risk

High beta stocks

Low beta stocks

The market portfolio has no individual firms

Only macro events are tracked by economists

Firm-specific events would be too numerous to list

Question 111 pts

Your stock has a = 1.53, the expected return on the stock market is 17.33%, and the yield on T-bills is 3%. What is the expected return on your stock?

Question 121 pts

You have a portfolio that consists of equal amounts of IBM stock and Treasury bills. If you replace one-third of Treasury bills with more IBM stock , the expected portfolio return will ______, ceteris paribus.

Group of answer choices

increase

decrease

remian unchanged

Question 131 pts

News that has been discounted by the market is reflected in the ________ portion of the total return.

Group of answer choices

unsystematic

expected

actual

unexpected