Finance 8 - 7. Currently, the risk-free rate, rRF, is 5%...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
7.  Currently, the risk-free rate, r RF , is 5% and the required return on the market, r M , is 11%. Your portfolio has a required rate of return of 9%. Your sister has a portfolio with a beta that is twice the beta of your portfolio. What is the required rate of return on your sister's portfolio? A)  12.5% B)  18.0% C)  17.0% D)  13.0% E)  12.0% Points Earned:  5.0/5.0  Correct Answer(s): D 8.  Stock A has a beta of 1.5 and Stock B has a beta of 0.5. Which of the following statements must be true about these securities? (Assume the market is in equilibrium.) A)  When held in isolation, Stock A has more risk than Stock B. B)  Stock B would be a more desirable addition to a portfolio than Stock A. C)  Stock A would be a more desirable addition to a portfolio than Stock B. D)  In equilibrium, the expected return on Stock A will be greater than that on Stock B. E)  In equilibrium, the expected return on Stock B will be greater than that on Stock A.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/05/2009 for the course BUS FIN 2100 taught by Professor Shmidl during the Spring '09 term at Laramie County Community College.

Page1 / 2

Finance 8 - 7. Currently, the risk-free rate, rRF, is 5%...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online