1. Which of the following would be the best estimate of the risk-free rate?

a)The rate of inflation

b)The average return on the S&P 500

c)The average return on Amazons stock

d)The average return on US Treasury bills

2. The Sharpe ratio can be considered a measure of

a)the reward of an investment in relation to the risk

b)the systematic risk of a stock

c)the total return of a stock investment

d)the historical return of an individual security

3. A positive Jensens alpha indicates that a portfolio has

a)a negative beta

b)an abnormal return

c)more total risk than the average portfolio

d)more systematic risk than the average portfolio

4. If an equally weighted portfolio contains 10 stocks, then

a)the stocks in the portfolio will each have a weight of 0.10

b)the return of the portfolio must be multiplied by 10 to get the annualized return

c)the standard deviation of the portfolio will be one-tenth the standard deviation of one of the stocks

d)the standard deviation of the portfolio will be 10 times the standard deviation of one of the stocks