02 EOC5352 - EOC535-2 Question MC #3 If I know for sure...

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EOC535-2 Question MC #3 If I know for sure that the market will have a positive return over the next year, to maximize my rate of return, I should increase the beta of my portfolio. T/F? Question MC #6 Which of the following statements is most correct? a. It is possible to have a situation where the market risk of a single stock is less than the market risk of a portfolio of stocks. b. The market risk premium will increase if, on average, market participants become more risk averse. c. If you selected a group of stocks whose returns are perfectly positively correlated, then you could end up with a portfolio for which none of the unsystematic risk is diversified away. d. Statements a and b are correct. e. All of the statements above are correct. Question MC #8 Your portfolio consists of $100,000 invested in a stock which has a beta = 0.8, $150,000 invested in a stock which has a beta = 1.2, and $50,000 invested in a stock which has a beta = 1.8. The risk-free rate is 7 percent. Last year this portfolio had a required rate of return of 13 percent. This year nothing has changed except for the fact that the market risk premium has increased by 2 percent (two percentage points). What is the portfolio's current required rate of return? a. 5.14%
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02 EOC5352 - EOC535-2 Question MC #3 If I know for sure...

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