When looking at the correlation of a pair of assets, we say the correlation is weak (and
Question:
When looking at the correlation of a pair of assets, we say the correlation is weak (and therefore good for diversifcation) is
Question 1 options:
if it is close to zero as long as it's positive | |
it is highly positive | |
if it is close to zero - whether negative or positive | |
if it is highly negative |
Question 2 (1 point)
In the simplified CAPM model, the dependent variable (that is, the Y variable) is
Question 2 options:
The returns of the stock with the highest Sharpe Ratio | |
The Market's return | |
The difference between the asset's returns and the market's return | |
The Asset's return |
Question 3 (1 point)
When looking to replace a low performing stock in the portfolio, which attribute or value would NOT likely be effective?
Question 3 options:
Its current price | |
Its performance compared to the S&P | |
Its sector performance compared to other sectors in the S&P | |
Its correlation compared to the other stocks in the portfolio |
Question 4 (1 point)
A beta less than one does not necessarily mean the risk is lower than the S&P because
Question 4 options:
We need to also consider Alpha | |
Beta does not measure risk | |
Beta is just an estimate | |
A Beta lower than one implies greater risk |
Question 5 (1 point)
We can calculate the probability of an estimated statistic exceeding a certain value if we know
Question 5 options:
its standard error | |
its geometric mean | |
its correlation with the S&P | |
the sample size |
Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe