Quiz - Nov 2006 - Solutions

Quiz - Nov 2006 - Solutions - Finance 100: Corporate...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Finance 100: Corporate Finance Professor Michael R. Roberts Quiz 3 November 8, 2006 Name: Solutions Section ( 2 Points. ..no joke! ): Question Maximum Student Score 1 30 2 25 3 25 4 20 Total 100 Instructions: Please read each question carefully Formula sheets are attached to the back of the quiz precise to the second decimal place. Good luck 1
Background image of page 1

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

View Full DocumentRight Arrow Icon
Please clearly circle the appropriate answer. (No explanation is necessary.) (a) (3 points) The relevant measure of risk for the Capital Market Line is standard deviation. (i) True (ii) False Solution: (i) True (b) (3 points) The minimum variance portfolio on the Capital Market Line contains only the risk-free security. (i) True (ii) False Solution: (i) True (c) (3 points) All equal-weighted portfolios of risky securities lie on the Secu- rity Market Line (i) True (ii) False Solution: (i) True (d) (3 points) Under the assumptions of the CAPM, every security will, in general, be off of the Capital Market Line and on the Security Market Line. (i) True (ii) False Solution: (i) True (e) (3 points) If a security’s expected return does not lie on the Security Market Line, then there is an arbitrage opportunity. (i) True
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 11/12/2009 for the course FNCE 100 taught by Professor Farroqi during the Three '09 term at University of Sydney.

Page1 / 6

Quiz - Nov 2006 - Solutions - Finance 100: Corporate...

This preview shows document pages 1 - 3. Sign up to view the full document.

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