FIN360TEST7

FIN360TEST7 - as the: Answer total return. systematic...

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The hypothesis that states that it is nearly impossible to predict exactly when stocks will do well relative to bonds is known as the: Answer fair price hypothesis. efficient market hypothesis. full information hypothesis. full price hypothesis. The stock of Alpha Company has an expected return of 15.5% and a beta of 1.5, and Gamma Company stock has an expected return of 13.4% and a beta of 1.2. Assume the CAPM holds. What’s the expected return on the market? Answer 12% 7% 10.3% 11.2% Standard deviation measures: Answer systematic risk. unsystematic risk. total risk. beta risk. The risk-free rate is 5% and the expected return on the market portfolio is 13%. A stock has a beta of 1.0, what is its expected return? Answer 8% 13% 5% none of the above The difference between the return on the market portfolio and the risk-free rate is known
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Unformatted text preview: as the: Answer total return. systematic premium. unsystematic return. market risk premium. The intercept of the security market line is: Answer E(Rm) - Rf 1/(E(Rm) - Rf) Rf - E(Rm) Rf what is the expected return given the following economic scenarios: (Recession Probability = 40%, Return = -25%) (Expansion Probability = 25%, Return = 20%) (Boom Probability = 35%, Return = 45%) ? Answer 10.75% 13.00% 16.00% 17.75% The beta of the risk-free asset is: Answer -1.0 0.0 0.5 1.0 The CAPM (capital asset pricing model) assumes that: Answer all assets can be traded investors are risk-averse investors have homogeneous expectations all of the above...
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This note was uploaded on 06/23/2011 for the course BUS 2B taught by Professor Hayle during the Spring '11 term at El Camino.

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FIN360TEST7 - as the: Answer total return. systematic...

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