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Unformatted text preview: Picture 2 Picture 3 Picture 4 Picture 5 Picture 6 Picture 7 Picture 8 Picture 9 Picture 20 Picture 21 Picture 2 Picture 23 Picture 24 Picture 32 Picture 3 Picture 34 Picture 35 Picture 36 Picture 4 Picture 45 Picture 46 Picture 47 Picture 48 HOMEWORK 5 1) In the case of a portfolio of N-stocks, the formula for portfolio variance contains how many unique covariance terms? N N/2 N(N-1) N^2 N(N-1)/2 N-1 N^2-N/2 N^3-2N 2) Given the following data for a stock: beta = 0.9; risk-free rate = 4%; market rate of return = 14%; and Expected rate of return on the stock = 13%. Then the stock is: Overpriced Risk-free Under priced Similar in its risk characteristics to the market portfolio Correctly priced 3) The Beta measure indicates: The actual return on an asset The change in the rate of return on an investment for a given change in the market return The ability to diversify risk The change in the rate of return on an investment for a given change in variance The actual return on an asset and the ability to diversify risk 4) Which portfolio has had the lowest average annual nominal rate of return during the 1900-2006 periods? Portfolio of U.S. Common stocks Portfolio of U.S. small stocks Portfolio of U.S. government bonds Portfolio of Treasury bills Portfolio of U.S. Preferred stocks 5) What has been the average annual nominal rate of return on a portfolio of U.S. common stocks over the past 107 years (from 1900 to 2006)? Picture 56 Picture 57 Picture 58 Picture 59 Picture 60 Picture 68 Picture 69 Picture 70 Picture 71 Picture 72 Picture 79 Picture 80 Picture 8 Picture 89 Picture 90 Picture 91 Picture 92 Picture 93 Between 2% and 3% Greater than 11% Between 3% and 4% Between 5% and 11% Between 4% and 5% 6) The efficient portfolios: I) Have only unique risk I I) Provide highest returns for a given level of risk I I I) Provide the least risk for a given level of returns IV) Have no risk at all I only...
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This note was uploaded on 12/04/2010 for the course FINANCE 6055 taught by Professor Wagner during the Spring '10 term at UniversitÃ Bocconi.
- Spring '10
- Corporate Finance