Which of the following risky assets would you choose, if the risk free rate (for investing and borrowing) is 8%?

E(r)=11% standard deviation=44%

E(r)=14% standard deviation=32%

E(r)=16% standard deviation=40%

E(r)=10% standard deviation=32%

You have bought a stock at $40. What kind of order do you need to place, if you want to make sure that you will not lose more than $5 per share on this trade? At what price?

Limit sell at $35

Stop buy at $45

Limit buy at $35

Stop loss at $35

Which of the following is most likely to have a low (non-negative) beta?

A high-end jewelry store

A water / sewer utility with retail clients

An organic peach farm whose income depends on the weather

An airline dependent on fuel prices

Which of the following statements is true?

If the assumptions underlying the Markowitz portfolio optimization theory hold, the markets Sharpe ratio is higher than the Sharpe ratio of any single company.

Very risk averse investors are better off choosing the minimum variance portfolio from their investment opportunity set than choosing the optimal risky portfolio from their investment opportunity set.

The covariance of two assets is always between -1 and +1.

he slope of the SCL is the market risk premium.