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practice_chp10 - Quiz 3 Winter 07 Key Version#1 1 The beta...

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1 Quiz 3 Winter 07 Key Version #1 1. The beta of a security is calculated by: A dividing the covariance of the security with the market by the variance of the market. b. dividing the correlation of the security with the market by the variance of the market. c. dividing the variance of the market by the covariance of the security with the market. d. dividing the variance of the market by the correlation of the security with the market. e. None of the above. Difficulty level: Easy Ross - Chapter 10 #14 Topic: SECURITY BETA 2. Risk that affects at most a small number of assets is called _____ risk. a. portfolio b. undiversifiable c. market d. total E unsystematic Difficulty level: Easy Ross - Chapter 10 #4 Topic: UNSYSTEMATIC RISK 3. The excess return required from a risky asset over that required from a risk-free asset is called the: Difficulty level: Easy Ross - Chapter 09 #1 Topic: RISK PREMIUM 4. The combination of the efficient set of portfolios with a riskless lending and borrowing rate results in: Difficulty level: Medium Ross - Chapter 10 #49 Topic: CAPITAL MARKET LINE
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