Answer all otherwise dont take

Question 1:

Question 2: The expected return of portfolio XYZ is 8%. If the portfolio XYZs variance is 10%, and risk-free rate is 3%, what is the Sharpe Ratio of the portfolio?

a. 0.05

b. 0.112

c. 0.158

d. 0.25

e. None of the above

Question 3: The optimal risky portfolio maximizes the____________ of the portfolio. [I] expected return [II] Sharpe ratio [III] downside risk protection

a. I

b. II

c. III

d. I and II

e. I, II and III

Question 4: The standard deviation of stock A is .60, while the standard deviation of stock B is .80. If the correlation coefficient for A and B is negative, then a portfolio that consists of 50% of stock A and 50% of stock B MUST have a standard deviation _________. Assume no short selling allowed

a. less than 0.5

b. greater than 0.7

c. greater than 0.5

d. less than 0.4

e. not enough information

Question 5: a. A

b. B

c. C

d. D

e. Not enough information

Question 6: Which of the following statements about CML and SML is FALSE?

		Securities that plot above the SML are undervalued.
		Securities that plot on the SML have the same Sharpe Ratio
		Investors expect to be compensated for systematic risk.
		The Sharpe Ratio of the market portfolio equals the CML slope.
		None of the above

The expected return and betas for three stocks are given below: Market returns, Rm, is 8% and risk-free rate is 3%. Which of the three stocks is undervalued according to the CAPM? A B C None There is not enough information to answer this question. Which of the following portfolios most likely fall below the efficient frontier? The risk free rate is 5%