6) Security X has an expected return of 20% per year and stock Y has an expected return of 40%. If 70% of the funds are invested in security X and 30% in security Y, the portfolio expected return is:

b) 20%

d) 18%

a) 26%

c) 30%

7.As the number of stocks in a portfolio is increased:

b) Systematic risk decreases.

d) Total risk approaches zero.

a) Unsystematic risk decreases and approaches zero.

c) Unsystematic risk increases and becomes equal to market risk.

8.The risk free rate of return is 3 percent; the average rate of return on the market is 11 percent. Stock X has a beta coefficient of 1.2,. What is the Required return?

a.14.6%

b.16%

c.12.6%

d.14%