1. Stock Standard Deviation Beta Ahmed textile 20% 0.59 Bank Alfalah 10% 0.61 Coca cola 12% 1.29 Based on the information provided, If you want to minimize risk, you would choose Stock ____ if it is to be held in isolation and Stock ____ if it is to be held as part of a well-diversified portfolio.
2. Bank Alfalah; Ahmed textile
3. Coca cola; Ahmed textile
4. Ahmed textile; Bank Alfalah
5. Ahmed textile; Ahmed textile
6. Coca cola; Bank Alfalah
7. MCQSMCQS
8. MARKS : 1.0
9. Which of the following statements is CORRECT?
10. If you add enough randomly selected stocks to a portfolio, you can completely eliminate all of the market risk from the portfolio.
11. If you formed a portfolio that consisted of all stocks with betas less than 1.0, which is about half of all stocks, the portfolio would itself have a beta coefficient that is equal to the weighted average beta of the stocks in the portfolio, and that portfolio would have less risk than a portfolio that consisted of all stocks in the market.
12. Market risk can be eliminated by forming a large portfolio, and if some Treasury bonds are held in the portfolio, the portfolio can be made to be completely riskless.
13. A portfolio that consists of all stocks in the market would have a required return that is equal to the riskless rate.
14. If you were restricted to investing in publicly traded common stocks, yet you wanted to minimize the riskiness of your portfolio as measured by its beta, then according to the CAPM theory you should invest an equal amount of money in each stock in the market. That is, if there were 10,000 traded stocks in the world, the least risky possible portfolio would include some shares of each one.
15. MCQSMCQS
16. MARKS : 1.0
17. Ahmad has 100,000 rupees invested in a 2-stock portfolio. 35,000 rupees invested in Stock lucky cement and the remainder is invested in Stock FFC . Lucky's beta is 1.50 and FFC 's beta is 0.70. What is the portfolio's beta?
18. 0.98
19. 0.92
20. 1.2
21. 0.88
22. MCQSMCQS
23. MARKS : 1.0
24. Which of the following statements is FALSE?
25. B) Beta differs from volatility.
26. C) If we assume that the market portfolio (or the S&P 500) is efficient, then changes in the value of the market portfolio represent unsystematic shocks to the economy.
27. A) The risk premium investors can earn by holding the market portfolio is the difference between the market portfolio's expected return and the risk-free interest rate.
28. D) Stocks in cyclical industries, in which revenues tend to vary greatly over the business cycle, are likely to be more sensitive to systematic risk and have higher betas than stocks in less sensitive industries.
29. MCQSMCQS
30. MARKS : 1.0
31. Fauji cement.'s stock has a a 30% chance of producing a 10% return, a 20% chance of producing a 28% return, and 50% chance of producing a 25% return. What is the firm's expected rate of return?
32. 10.2%
33. 9.8%
34. 9.65%
35. 9.9%
36. MCQSMCQS
37. MARKS : 1.0
38. Engro. is considering a capital budgeting project that has a standard deviation of 30% and an expected return of 25%. What is the project's coefficient of variation?
39. 1.35
40. 0.83
41. 1.4
42. 1.2