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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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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.
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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.