Question 1 (5 points)

The most important characteristic in determining the expected return of a well-diversified portfolio is the variances of the individual assets in the portfolio

Question 1 options:

	True
	False

Question 2 (10 points)

Classify the following event as mostly systematic, mostly unsystematic:

"A manufacturer loses a multi million-dollar product liability suit"

Question 2 options:

	Unsystematic
	Systematic

Question 3 (3 points)

Classify the following event as mostly systematic,mostly unsystematic:

"A supreme court decision substantially broadens producer liability for injuries suffered by product users"

Question 3 options:

	Unsystematic
	Systematic

Question 4 (3 points)

Classify the following event as mostly systematic,mostly unsystematic:

"An oil tanker ruptures,creating a large oil spill"

Question 4 options:

	Systematic
	Unsystematic

Question 5 (3 points)

Classify the following event as mostly systematic,mostly unsystematic:

"The interest rate a company pays on its short-term debt borrowing is increased by its bank"

Question 5 options:

	Systematic
	Unsystematic

Question 6 (3 points)

Classify the following event as mostly systematic,mostly unsystematic:

"Short-term interest rates increase unexpectedly"

Question 6 options:

	Systematic
	Unsystematic

Question 7 (5 points)

Higher level of volatility means higher returns with lower risk.

Question 7 options:

	True
	False

Question 8 (5 points)

Calculate the arithmetic mean return of the following returns

Date	Return
11/01/2018	5.07%
11/14/2018	5.50%
12/01/2018	-5.60%
12/14/2018	5.84%

NOTE: Enter the PERCENTAGE number rounding to two decimals. If your decimal answer is 0.034576, your answer must be3.46.DO NOT USE the%sign

Your Answer:

Question 8 options:

Answer

Question 9 (5 points)

Calculate the compounding return of the following returns

Date	Return
11/01/2018	-2.48%
11/14/2018	7.84%
12/01/2018	1.94%
12/14/2018	6.69%

NOTE: Enter the PERCENTAGE number rounding to two decimals. If your decimal answer is 0.034576, your answer must be3.46.DO NOT USE the%sign

Your Answer:

Question 9 options:

Answer

Question 10 (5 points)

A stock is bought for $30.61 and sold for $34.53 a year later, immediately after it has paid a dividend of $4.50. What is the capital gain rate for this transaction?

NOTE: Enterthe PERCENTAGE number rounding to two decimals. If your decimal answer is 0.034576, your answer must be 3.46.DO NOT USE the%sign.

Your Answer:

Question 10 options:

Answer

Question 11 (8 points)

A stock is bought for $17.22 and sold for $41.41 a year later, immediately after it has paid a dividend of $2.98. What is the dividend yield for this transaction?

NOTE:Enterthe PERCENTAGEnumber rounding to two decimals.If your decimalanswer is0.034576,your answer must be3.46.DO NOT USE the%sign.

Your Answer:

Question 11 options:

Answer

Question 12 (8 points)

You own a portfolio that has $3,157.74 invested in Stock A and $7,439 invested in Stock B. If the expected returns on these stocks are 9.08% and 11.04%, respectively, what is the expected return on the portfolio?

NOTE:Enterthe PERCENTAGEnumber rounding to two decimals.If your decimalanswer is0.034576,your answer must be3.46.DO NOT USE the%sign.

Your Answer:

Question 12 options:

Answer

Question 13 (8 points)

You have $14,661 to invest in a stock portfolio. Your choices are Stock "X" with an expected return of 12.529% and Stock Y with an expected return of 9.54%. If your goal is to create a portfolio with an expected return of 11.77%, how much money will you invest in Stock X?

NOTE: Answer using four decimals after the dot.

Your Answer:

Question 13 options:

Answer

Question 14 (12 points)

Calculate the variance for the returns below

Date	Return
11/01/2025	-3.46%
11/14/2025	4.85%
12/01/2025	5.13%
12/14/2025	5.18%

NOTE: Enter the DECIMAL number rounding to four decimals. If your decimal answer is 0.034576, your answer must be 0.0346.DO NOT USE the%sign

Your Answer:

Question 14 options:

Answer

Question 15 (12 points)

Economy	Probability of State of Economy	Return Stock A	Return Stock B	Return Stock C
Boom	0.20	18.34%	29.03%	29.13%
Good	0.35	11.50%	12.61%	9.71%
Poor	0.40	5.57%	3.32%	3.19%
Bust	0.05	1.06%	2.40%	2.40%

Your portfolio is invested 34% each in stock A and C and the remaining in stock B. What is the expected return of the portfolio?

NOTE:Enterthe PERCENTAGEnumber rounding to two decimals.If your decimalanswer is0.034576,your answer must be3.46.DO NOT USE the%sign

Your Answer:

Question 15 options:

Answer

Question 16 (5 points)

Stock has a beta of 1.32, the expected return on the market is 9.06%, and the risk-free rate is 2.22%. What must the expected return on this stock be?

NOTE:Enterthe PERCENTAGEnumber rounding to two decimals.If your decimalanswer is0.034576,your answer must be3.46.DO NOT USE the%sign

Your Answer:

Question 16 options:

Answer