questions (20-23)

QUESTION 20 Ed Lawrence has $100,000 Invested. Of that $30,000 is invested in IBM stock, $25,000 is invested in T-bills, and the remainder is invested in corporate bonds. Which of the following is NOT correct regarding his portfolio weights? (All values are current market values.) A Ed has 30% of his portfolio invested in stocks B.Ed has 45% of his portfolio invested in corporate bonds. Ed has 70% of his portfolio invested in assets other than stocks. D. Ed has 70% of his portfolio invested in risk-free assets. "Elf Ed sells his corporate bonds and buys GM stock with the proceeds, he will end up with 75% of his portfolio invested in stocks, QUESTION 21 The following information is relevant for Questions 20-23 Investment Expected return Standard deviation Correlation between A and B Stock A $3,000 16% 50% 0.30 Stock B $7000 9% MO 20. The expected return and standard deviation of a portfolio of Stock A and Stock are A expected returns 13.9% standard deviation 40.3% B. expected return 11.1% standard deviation 35,5% Cexpected return 11.1% standard deviation 33.7% D. expected retur 13.9% standard deviation 35.5% QUESTION 22 If the correlation between the returns of Stocks A and B was 0.80 Instead of 0.30, which of the following statements would be true? A the expected return on the portfolio would not change, and the standard deviation would increase B. the expected return on the portfolio would increase, and the standard deviation would increase the expected return on the portfolio would not change, and the standard deviation would decrease D. the expected retum on the portfolio would decrease, and the standard deviation would increato QUESTION 23 If Stock is replaced by Treasury bills yielding the expected return and standard deviation of the portfolio are A expected return 12.1%, standard deviation - 15.0% B. expected return - 12.1%; standard deviation - 35.0% expected return 6.9% standard deviation 50.0% D. expected return 6.9%, standard deviation - 15.0%