Question 1

The expected return for Skyview Aerospace Inc. is 24.60% with the expected probabilities below. What is the standard deviation for the expected return for an investment in this company?

Probability	Return
0.08	-25%
0.37	+15%
0.43	+35%
0.12	+50%

Group of answer choices

21.65%

18.84%

19.69%

9.22%

18.17%

Flag question: Question2

Essentially, the diversification principle in investing indicates it is better to own a large number of different common stocks in a portfolio versus owning just one stock by itself because ____.

Group of answer choices

owning a portfolio of stocks can result in a higher expected return for the portfolio than the expected return for owning just one stock.

owning a single stock on a standalone basis is always riskier than owning a portfolio of stocks because exposure to market risks can be partially eliminated with a portfolio.

owning a single stock on a standalone basis always represents a higher risk-lower return investment profile versus a portfolio.

owning a portfolio of different kinds of stocks usually can result in the reduction of variation in expected investment returns than owning just one stock.

Flag question: Question 3

What would be the expected rate of return for Kramerica Corp. (KC) Common Stock if KC has a beta of 2.35; the expected return for the Stock Market as a whole is 15.50%; and the U.S. Treasury Bill rate is expected to average 1.75%? Use the Capital Asset Pricing Model (aka Security Market Line) to calculate the estimated return for KC.

Group of answer choices

19.1675%

16.562%

34.0625%

26.8983%

25.7150%

Flag question: Question 4

The beta statistic used in investment analysis is ___; if a companys beta was +0.86, this would mean _____.

Group of answer choices

a measure of the covariance of one stocks return with the market as a whole; the companys return is less risky than the market as a whole.

a measure of the covariance of one stocks return with the market as a whole; the companys return is more risky than the market as a whole.

a measure of the covariance of one stocks return with its industry as a whole; the companys return is more risky than its industry.

a measure of the covariance of one stocks return with its industry as a whole; the companys return is 2.60 times as variable than its industry.

Flag question: Question 5

What is the Expected Return for Newsom-Taylor Companys Common Stock if the following assumptions about its prospective returns are as follows?

Probability	Possible Return
10%	-55.00%
25%	5.00%
35%	20.00%
20%	35.00%
10%	65.00%

Group of answer choices

31.8950%

27.9543%

16.2500%

14.9050%