MAN303_PP3 - MAN303 PRACTCE PROBLEMS 3 (Questions from Chp...

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MAN303 PRACTİCE PROBLEMS 3 (Questions from Chp 5) Correct answer is in bold . (1) You observe the following information regarding Company X and Company Y: Company X has a higher expected mean return than Company Y. Company X has a lower standard deviation than Company Y. Company X has a higher beta than Company Y. Given this information, which of the following statements is most correct? a. Company X has a lower coefficient of variation than Company Y. b. Company X has more company-specific risk than Company Y. c. Company X is a better stock to buy than Company Y. d. Statements a and b are correct. e. Statements a, b, and c are correct. (2) Bob has a $50,000 stock portfolio with a beta of 1.2, an expected return of 10.8 percent, and a standard deviation of 25 percent. Becky has a $50,000 portfolio with a beta of 0.8, an expected return of 9.2 percent, and a standard deviation of 25 percent. The correlation coefficient, r, between Bob’s and Becky’s portfolios is 0. Bob and Becky are engaged to be married. Which of the following best describes their combined $100,000 portfolio? a.
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MAN303_PP3 - MAN303 PRACTCE PROBLEMS 3 (Questions from Chp...

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