EOC5352 - EOL2 True/False Indicate whether the statement is...

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EOL2 True/False Indicate whether the statement is true or false. ____ 1. If we develop a weighted average of the possible return outcomes, multiplying each outcome or "state" by its respective probability of occurrence for a particular stock, we can construct a payoff matrix of expected re- turns. ____ 2. One key result of applying the Capital Asset Pricing Model is that the risk and return of an individual security should be analyzed by how that security affects the risk and return of the portfolio in which it is held. ____ 3. Businesses earn returns for security holders by purchasing and operating physical assets. The relevant risk of any physical asset must be measured in terms of its effect on the risk of the firm's securities. ____ 4. A portfolio with a beta of minus 2 has the same degree of risk to its holder, relative to the market, as a portfo- lio with a beta of plus 2. However, the holder of either portfolio could lower his or her risk exposure by buy- ing some "normal" stocks. Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 5.
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EOC5352 - EOL2 True/False Indicate whether the statement is...

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