Question: Q CONCEPT QUESTIONS IN RISK AND RETURN 1. How do calculate the expected return on a security? 2. How do we calculate the variance of

Q CONCEPT QUESTIONS IN RISK AND RETURN 1. How do calculate the expected return on a security? 2. How do we calculate the variance of the expected return? 3. What is a portfolio? And portfolio weight? 4. How do we calculate the expected return on a portfolio? 5. What are the two basic parts of return? 6. What are the two basic types of risk? 7. What happens to the standard deviation of return for a portfolio if we increase the number of securities in the portfolio? 8. What is the principle of diversification? 9. Why is some risk diversiable and some risk nondiversifiable? 10. What is the systematic risk principle? 11. What does a beta coefficient measure? 12. How do you calculate a portfolio beta? 13. What is the security market line (SML)? Why must all assets plot directly on the SML on a wellfunctioning market? 14. What is the Capital Asset Pricing Model (CAPM)? What does it tell us about the required return on a risky investment? 15. if an investment is recommended to be purchased. would it plot above or below the SML

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