Strayer University - FIN 534 Week 5 Complete Quiz. A+ Graded. Latest 2021.Question 1
4 out of 4 points
If you randomly
select stocks and
add them to
... [Show More] your
portfolio, which of
the following
statements best
describes what you
should expect?
Answer
Selected
Answer: Adding more such stocks will reduce the portfolio's unsystematic, or
diversifiable, risk.
Correct
Answer: Adding more such stocks will reduce the portfolio's unsystematic, or
diversifiable, risk.
• Question 2
4 out of 4 points
Assume that the
risk-free rate is 6%
and the market risk
premium is 5%.
Given this
information, which
of the following
statements is
CORRECT?
Answer
Selected Answer:
An index fund with beta = 1.0 should have a required return of 11%.
Correct Answer:
An index fund with beta = 1.0 should have a required return of 11%.
• Question 3
4 out of 4 points
Which of the
following
statements is
CORRECT?
Answer
Selected
Answer: An investor can eliminate almost all diversifiable risk if he or she holds a
very large, well-diversified portfolio of stocks.
Correct
Answer: An investor can eliminate almost all diversifiable risk if he or she holds a
very large, well-diversified portfolio of stocks.
• Question 4
4 out of 4 points
How would the
Security Market
Line be affected,
other things held
constant, if the
expected inflation
rate decreases and
investors also
become more risk
averse?
Answer
Selected Answer:
The y-axis intercept would decline, and the slope would increase.
Correct Answer:
The y-axis intercept would decline, and the slope would increase.
• Question 5
4 out of 4 points
Stocks A and B each
have an expected
return of 15%, a
standard deviation
of 20%, and a beta
of 1.2. The returns
on the two stocks
have a correlation
coefficient of +0.6.
Your portfolio
consists of 50% A
and 50% B. Which
of the following
statements is
CORRECT?
Answer
Selected Answer:
The portfolio's expected return is 15%.
Correct Answer:
The portfolio's expected return is 15%.
• Question 6
4 out of 4 points
Which of the
following
statements is
CORRECT?
Answer
Selected
Answer: A security's beta measures its non-diversifiable, or market, risk relative to
that of an average stock.
Correct
Answer: A security's beta measures its non-diversifiable, or market, risk relative to
that of an average stock.
• Question 7
4 out of 4 points
If markets are in
equilibrium, which
of the following
conditions will
exist?
Answer
Selected
Answer: Each stock's expected return should equal its required return as seen by
the marginal investor.
Correct
Answer: Each stock's expected return should equal its required return as seen by
the marginal investor.
• Question 8
4 out of 4 points
Which of the
following
statements is
CORRECT? [Show Less]