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Question 11. The stock of Billingsley United has a beta of 0.92. The market risk premium is 8.4 percent and the risk-free rate is 3.2 percent. What is the expected return on this stock?8.87 percent9.69 percent10.93 percent11.52 percent12.01 percent1 pointsExpected return on stock = risk-free rate + beta(market risk premium)= 3.2 + 0.92(8.4)= 10.928 = 10.93Question 21. You own a portfolio of two stocks, A and B. Stock A is valued at $6,540 and has an expected return of 11.2 percent. Stock B has an expected return of 8.1 percent. What is the expected return on the portfolio if the portfolio value is $9,500?9.58 percent9.62 percent9.74 percent9.97 percent10.23 percent1 points Return on stock A: 6,540 x 0.112 = $732.48Return on stock B: 2,960 x 0.081 = $239.76Total return on $9,500 portfolio: $972.24.Rate of return on $9,500 portfolio: 972.24 ÷ 9,500 = 0.1023 = 10.23%.Question 31. Portfolio diversification eliminates which one of the following?Total investment riskPortfolio risk premiumMarket riskUnsystematic riskReward for bearing risk1 pointsQuestion 41. What is the beta of the following portfolio?0.981.021.111.141.201 pointsQuestion 51. You own a portfolio that has $1,900 invested in Stock A and $2,700 invested in Stock B. If the expected returns on these stocks are 9 percent and 15 percent, respectively, what is the expected return on the portfolio?10.57 percent11.14 percent11.96 percent12.52 percent13.07 percent1 points E(r) = [1,900/($1,900 + $2,700)][0.09] + [$2,700/($1,900 + $2,700)][0.15] = 12.52 percentQuestion 61. Standard deviation measures _____ risk while beta measures _____ risk.systematic; unsystematicunsystematic; systematictotal; unsystematictotal; systematicasset-specific; market1 pointsQuestion 71. A $36,000 portfolio is invested in a risk-free security and two stocks. The beta of stock A is 1.29 while the beta of stock B is 0.90. One-half of the portfolio is invested in the risk-free security. How much is invested in stock A if the beta of the portfolio is 0.58?$6,000$9,000$12,000$15,000$18,0001 pointsQuestion 81. What is the beta of the following portfolio?1.081.141.171.211.231 pointsQuestion 91. The systematic risk is same as:Unique riskDiversifiable riskAsset-specific riskMarket riskUnsystematic risk1 pointsQuestion 101. Suppose a stock had an initial price of $69.81 per share, paid a dividend of $5.4 per share during the year, and had an ending share price of $98.14. What are the percentage returns?Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 111. Suppose the returns for Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%.Compute the standard deviation of the returns.Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 121. Suppose a stock had an initial price of $60.3 per share, paid a dividend of $9 per share during the year, and had an ending share price of $108.76. What are the dollar returns?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 131. Calculate the expected returns of your portfolioStock Invest Exp RetA $204 8.2%B $994 14.4%C $1,210 27.6%Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.Question 141. Suppose a stock had an initial price of $77.74 per share, paid a dividend of $8.4 per share during the year, and had an ending share price of $90.3. What are the percentage returns?Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 151. Suppose a stock had an initial price of $65.43 per share, paid a dividend of $8.3 per share during the year, and had an ending share price of $108.54. If you own 45 shares, what are the dollar returns?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 161. Suppose the real rate is 2.52% and the nominal rate is 11.89%. Solve for the inflation rate.Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 171. Suppose the real rate is 3.56% and the inflation rate is 6.06%. Solve for the nominal rate.Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 181. You own a portfolio invested 16.68% in Stock A, 11.93% in Stock B, 13.69% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.78, 0.38, 0.51, and 0.73. What is the portfolio beta?Note: Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.1 pointsQuestion 191. You have observed the following returns on ABC’s stocks over the last five years:3.8%, 8.8%, -5.8%, 12.7%, -3.8%What is the arithmetic average returns on the stock over this five-year period.Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 201. You have observed the following returns on ABC’s stocks over the last five years:4.2%, 8%, -5.5%, 13.6%, -8.4%What is the geometric average returns on the stock over this five-year period.Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 211. Suppose the nominal rate is 10.82% and the inflation rate is 5.82%. Solve for the real rate.Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 221. You have observed the following returns on ABC’s stocks over the last five years:2%, 8.4%, 9%, 11.2%, 7.9%What is the geometric average returns on the stock over this five-year period.Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 231. Suppose a stock had an initial price of $63.92 per share, paid a dividend of $5.6 per share during the year, and had an ending share price of $90.08. What are the percentage returns if you own 25 shares?Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 241. Calculate the expected returns of your portfolioStock Invest Exp RetA $203 3.5%B $670 18.2%C $464 23.5%Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.1 pointsQuestion 251. You have observed the following returns on ABC’s stocks over the last five years:4.5%, 9.7%, 7.5%, 12.9%, 4.9%What is the arithmetic average returns on the stock over this five-year period.Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 261. Based on the following information, calculate the expected returns:Prob ReturnRecession 30% 33.1%Boom 70% 3.1%Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.1 pointsQuestion 271. A portfolio is invested 41.2% in Stock A, 18.8% in Stock B, and the remainder in Stock C. The expected returns are 18.6%, 33.4%, and 18.9% respectively. What is the portfolio’s expected returns?Note: Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 12.345% then enter as 12.35 in the answer box.1 pointsQuestion 281. You own a portfolio invested 22.72% in Stock A, 16.67% in Stock B, 28.63% in Stock C, and the remainder in Stock D. The beta of these four stocks are 0.65, 0.19, 0.73, and 1.39. What is the portfolio beta?Note: Enter your answer rounded off to two decimal points. For example, if your answer is 12.345 then enter as 12.35 in the answer box.
