Exam 2_Questions IPM

Exam 2_Questions IPM - Most-relevant concept questions and...

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Most-relevant concept questions and end-of-chapter problems from the textbook Investments with Excel spreadsheets, by Bodie, Kane, and Marcus, 2009, McGraw-Hill International Edition (ISBN: 007 127828-7) Midterm Exam 2 – Chapters 9, 10, 11, 12, 14 (dropped) and 17 1. Explain the optimal risky portfolio of the single-index model. How do we compute information ratio? 2. Describe the industry version of the index model. What is the meaning of the so- called ‘adjusted’ beta? 3. How do we predict beta? What is the meaning of constructing a tracking portfolio? 4. Explain the simplifying assumptions of the basic version of CAPM. 5. Why would all investors hold the market portfolio? How can the risk premium of the market portfolio be determined? 6. Why might the passive strategy be more efficient than the active strategy? 7. How do we compute expected returns on individual securities? What ratio is called market price of risk? 8. Explain the role of Security Market Line (SML). What is the difference between the security market line and the capital market line? 9.
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Exam 2_Questions IPM - Most-relevant concept questions and...

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