13 Fin 301 Review Solutions

13 Fin 301 Review Solutions - Review Solutions Put Your...

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1 Review Solutions 2 Put Your Stock in Gold? Some of gold’s total risk may be irrelevant because it can be eliminated through diversification. Gold probably has a low correlation with the market portfolio. The resulting low beta explains its low expected return.
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2 3 Choix Multiple If the semi-strong form of the efficient market hypothesis holds, then A. future stock prices can be predicted based on past prices. B. investors should not invest in index funds. C. stock prices reflect all publicly available information. D. stock prices reflect all relevant information whether public or private. E. investors could do well by carefully studying firms’ financial statements. 4 De Múltiple Opción Which of the following is true about a security that plots below the security market line? A. The security’s return is lower than what it should be based on its risk. B. The security is under-valued. C. The security’s return is higher than what it should be based on its risk. D. A) and B) only. E. B) and C) only.
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5 Multiple Choice The benefits from diversification are the greatest when the returns on two assets A. are independent. B. are perfectly positively correlated. C. have a negative correlation coefficient. D.
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This note was uploaded on 11/01/2011 for the course BUSINESS FIN301 taught by Professor Andrew during the Fall '10 term at University of Alberta.

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13 Fin 301 Review Solutions - Review Solutions Put Your...

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