2. Measuring standalone risk using realized data M Aa a
Returns earned over a given time period are called realized returns. Historical data on realized returns is often used
to estimate future results. Analysts across companies use realized stock returns

6. Portfolio beta and weights Aa Aa a
Brandon is an analyst at a wealth management rm. One of his clients holds a $7,500 portfolio that consists of four
stocks. The investment allocation in the portfolio along with the contribution of risk from each stock

1. Statistical measures of standalone risk Aa Aa EL
Remember, an expected value is a statistical measure of the average (mean) value expected to occur during all
possible circumstances. To compute an assets expected return under a range of possible circum

3. Portfolio risk and diversication Aa Aa 51
A financial planner is examining the portfolios held by several of her clients. Which of the following portfolios is likely
to have the smallest standard deviation?
1 Q A portfolio consisting of about 30 random

8. Changes to the security market line Aa Aa a
The following graph plots the current SML and indicates the return that investors require from holding stock from
Happy Corp. (HC). Based on the graph, complete the table that follows.
REQUIRED RATE OF RETURN

5. Portfolio risk and return A3 Aa a
Emma holds a $10,000 portfolio that consists of four stocks. Her investment in each stock, as well as each stocks
beta, is listed in the following table:
Stock Investment Standard Deviation
Omni Consumer Products Co.

6. Portfolio beta and weights Aa Aa a
Gregory is an analyst at a wealth management rm. One of his clients holds a $5,000 portfolio that consists of four
stocks. The investment allocation in the portfolio along with the contribution of risk from each stock

4. Portfolio expected return and risk Aa Aa E
A collection of financial assets and securities is referred to as a portfolio. Most individuals and institutions invest in a
portfolio, making portfolio risk analysis an integral part of finance. Just like sta

7. The Capital Asset Pricing Model and the security market line Aa Aa E]
Wilson holds a portfolio that invests equally in three stocks (wA = wB = we = 1/3). Each stock is described in the
following table:
Stock Beta Standard Deviation Expected Return
A 0.

6. Portfolio beta and weights Aa Aa a
Rafael is an analyst at a wealth management rm. One of his clients holds a $10,000 portfolio that consists of four
stocks. The investment allocation in the portfolio along with the contribution of risk from each stock