State of Economy

Probability of State of Economy

Asset A Rate of Return

Asset B Rate of Return

Boom

$0\mathrm{.}25$

$0\mathrm{.}25$

$0\mathrm{.}10$

Normal

$0\mathrm{.}5$

$0\mathrm{.}15$

$0\mathrm{.}05$

Recession

$0\mathrm{.}25$

$-0\mathrm{.}08$

$-0\mathrm{.}04$

Question $1(1$ point$)$

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What is the expected return for asset A$?$

Question $1$ options:

Question $2(1$ point$)$

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What is the expected return for asset B$?$

Question $2$ options:

Question $3(1$ point$)$

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What is the standard deviation for asset A$?$

Question $3$ options:

Question $4(1$ point$)$

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What is the standard deviation for asset B$?$

Question $4$ options:

Question $5(1$ point$)$

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What is the expected return of a portfolio that has $80\%$ in Asset A and $20\%$ in Asset B$?$

Question $5$ options:

Question $6(1$ point$)$

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The standard deviation of the $70\%$ A and $30\%$ B portfolio most likely should

Question $6$ options:

A$)$

Equal $70\%$ X A$\text{'}$s standard deviation plus $30\%$ x B$\text{'}$s standard deviation.

B$)$

Be greater than $70\%$ X A$\text{'}$s standard deviation plus $30\%$ x B$\text{'}$s standard deviation.

C$)$

Be less than $70\%$ X A$\text{'}$s standard deviation plus $30\%$ x B$\text{'}$s standard deviation.

Question $7(1$ point$)$

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Ivey Inc. has an expected return of $10\%$ and a beta of $1\mathrm{.}30.$ The risk$-$free rate is $5\%.$ What is the MARKET RISK PREMIUM?

Question $7$ options:

Question $8(1$ point$)$

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Ivey Inc. has an expected return of $10\%$ and a beta of $1\mathrm{.}30.$ The risk$-$free rate is $5\%.$ What is the EXPECTED RETURN ON THE MARKET?

Question $8$ options:

Question $9(1$ point$)$

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Furlow Corp. has a beta of $0\mathrm{.}80.$ The risk$-$free rate is $4\%$ and the expected return on the market is $8\%.$ What is the EXPECTED RETURN for Furlow, Inc?

Question $9$ options:

Question $10(1$ point$)$

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What is the beta of Ryan Corp. if it has an expected return of $15\%,$ the yield on a Treasury Bill is $3\mathrm{.}50\%,$ and the expected return on the market is $10\%?$