DO NOT SAY IT IS MISSING CHARTS GRAPHS OR INCOMPLETE QUESTION BECAUSE IT IS COMPLETE

Calculate the standard deviation of returns of Stock Q, given the following information.

State Stock return Probability of state

Recession -5% 25%

Normal 10% 50%

Boom 25% 25%

a.10.61%

b.9.53%

c.8.96%

d.7.33%

e.6.30%

A portfolio consists of 50% invested in Stock X and 50% invested in Stock Y. We expect two probable states to occur in the future: boom or normal. The probability of each state and the return of each stock in each state are presented in the table below.

State Probability of state Return on Stock X Return on Stock Y

Boom 20% 25% 35%

Normal 80% 10% 5%

What are the expected portfolio return and standard deviation?

a.12% and 8.1%

b.12% and 9%

c.14.25% and 10.31%

d.14.25% and 9%

e.18.75% and 12.12%

Given the following information on a portfolio of Stock X and Stock Y, what is the portfolio standard deviation?

• Probability of boom state = 20%
• Probability of normal state = 80%
• Expected return on X = 13%
• Expected return on Y = 11%
• Variance on X = 0.0036
• Variance on Y = 0.0144
• Portfolio weight on X = 50%
• Portfolio weight on Y = 50%
• Correlation between X and Y = -1

Select one:

a.1%

b.2%

c.3%

d.6%

e.9%

Stock A has an expected return of 12%, a standard deviation of 24% on its returns, and a beta of 1.2. Stock B has an expected return of 15%, a standard deviation of 30% on its returns, and a beta of 1.5. The correlation between the two stocks is 0.8. If we invested $30,000 in Stock A and $20,000 in Stock B, what is the beta of our portfolio?

Select one:

a.1.03

b.1.25

c.1.32

d.1.40

e.1.56

The reward-to-risk ratio is also sometimes called the

Select one:

a.Sharpe ratio.

b.risk premium.

c.coefficient of variation.

d.Treynor index.

e.Gordon ratio.

If an asset plotted below the security market line, its expected return would

Select one:

a.remain the same.

b.rise.

c.fall.

d.go into free fall.

e.fall and then rise again.

Radagast Inc. has one-million common shares outstanding, with each share priced at $12. The company's equity beta is 2. What is the expected return on the company's shares if the risk-free rate is 3% and the market return is 12%?

Select one:

a.5%

b.8%

c.13%

d.21%

e.31%