correctQuestion 7

0 / 1 pts

Use the following information:

	Probability	w1	w2	w3
state1	0.3333333	15.00%	8.00%	3.00%
state2	0.3333333	9.00%	5.00%	8.00%
state3	0.3333333	12.00%	7.00%	4.00%
% wealth invested		33.3333%	33.3333%	33.3333%

Assuming that the market rate of return over the next year is expected to be 6.5% and that the risk-free rate is expected to be 2.5%, what must the beta for security A be in order for the CAPM to hold?

between 2.3 and 2.4

between 2.2 and 2.3

less than 2.1

between 2.1 and 2.2

greater than 2.4

IncorrectQuestion 8

0 / 1 pts

Use the following information:

	Probability	w1	w2	w3
state1	0.3333333	15.00%	8.00%	3.00%
state2	0.3333333	9.00%	5.00%	8.00%
state3	0.3333333	12.00%	7.00%	4.00%
% wealth invested		33.3333%	33.3333%	33.3333%

Assuming that Asset A is priced to yield 5%, is Asset A overvalued, undervalued, or correctly valued?

overvalued

undervalued

correctly valued

IncorrectQuestion 9

0 / 1 pts

Use the following information:

Asset A			Asset B
E(Ra)=	10%		E(Rb)=
A =	12%		B =
Wa=	60%		Wb=
COVAB =	0.0041

What is the expected return for the portfolio made up of assets A and B?

greater than 9.0%

between 8.5% and 9.0%

less than 7.5%

between 7.5% and 8.0%

between 8.0% and 8.5%

IncorrectQuestion 10

0 / 1 pts

Use the following information:

Asset A			Asset B
E(Ra)=	10%		E(Rb)=
A =	12%		B =
Wa=	60%		Wb=
COVAB =	0.0041

What is the expected return for the portfolio made up of assets A and B?

less than .05

greater than .08

between .06 and .07

between .07 and .08