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Unformatted text preview: FIN 3716 Quiz #9 1. Which one of the following statements is an example of unsystematic risk? a. The number of vehicles sold by a major manufacturer was less than anticipated. b. GDP was 0.5 percent lower than expected. c. The inflation rate increased by 5 percent. d. The value of the dollar declined against the other major currencies. 2. Which one of the following statements is correct? a. Beta measures total risk. b. The higher the beta, the lower the expected return on a security. c. A portfolio needs to contain about seventy-five diverse securities before the majority of the unsystematic risk is eliminated from the portfolio. d. The amount of risk premium a security should earn depends on the security’s beta. 3. Asset A has an expected return of 12.5 percent and a beta of 1.15. What is the market’s reward- to-risk ratio if the risk-free rate is 3.9 percent? a. 7.48 percent b. 8.62 percent c. 9.90 percent d. 10.96 percent 4. You own a portfolio which is 20 percent invested in U.S. Treasury bills, 30 percent invested in 4....
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This note was uploaded on 12/14/2010 for the course FIN 3716 taught by Professor Fang during the Fall '10 term at LSU.
- Fall '10