Healthcare Finance Final Exam
Questions with complete solution
2025/2026
True or False:
The slope of the Security Market Line is the market risk premium (Rm - Rf) - correct answer ✔True
Total risk is: - correct answer ✔-Measured by standard deviation
-Not measured since it's diversified anyway
-Measured by 1 - Beta
True or False:
The independent (X-axis) variable typically used to estimate Beta is the stock's return. - correct answer
✔False
A portfolio is typically well-diversified when it contains: - correct answer ✔No fewer than 30 stocks
True or False:
Equilibrium exists when a stock lies ON the Security Market Line - there is no pressure to buy or sell the
stock since it is properly priced. - correct answer ✔True
True or False:
When considering a well-diversified investor, measuring unsystematic risk is not important because we
assume that it will be diversified away. - correct answer ✔True
Which of these differs in meaning from the others:
, -Systematic risk
-Company unique risk
-Market risk
-Non diversifiable risk - correct answer ✔Company unique risk
True or False:
A portfolio's standard deviation will be between the standard deviations of the stocks in that portfolio. -
correct answer ✔False
True or False:
The slope of the Security Market Line is the Beta of the stock. - correct answer ✔False
Beta measures - correct answer ✔Systematic risk
True or False:
When considering a well-diversified investor, measuring unsystematic risk is not important because we
assume that it will be diversified away. - correct answer ✔True
A stock with a low Beta would have a: - correct answer ✔Regression line with a low (relatively flat)
slope
True or False:
The Security Market Line is a graph of the CAPM equation. - correct answer ✔True
True or False:
Equilibrium exists when a stock's expected return equals its required rate of return (it lies ON the
Security Market Line). - correct answer ✔True
Questions with complete solution
2025/2026
True or False:
The slope of the Security Market Line is the market risk premium (Rm - Rf) - correct answer ✔True
Total risk is: - correct answer ✔-Measured by standard deviation
-Not measured since it's diversified anyway
-Measured by 1 - Beta
True or False:
The independent (X-axis) variable typically used to estimate Beta is the stock's return. - correct answer
✔False
A portfolio is typically well-diversified when it contains: - correct answer ✔No fewer than 30 stocks
True or False:
Equilibrium exists when a stock lies ON the Security Market Line - there is no pressure to buy or sell the
stock since it is properly priced. - correct answer ✔True
True or False:
When considering a well-diversified investor, measuring unsystematic risk is not important because we
assume that it will be diversified away. - correct answer ✔True
Which of these differs in meaning from the others:
, -Systematic risk
-Company unique risk
-Market risk
-Non diversifiable risk - correct answer ✔Company unique risk
True or False:
A portfolio's standard deviation will be between the standard deviations of the stocks in that portfolio. -
correct answer ✔False
True or False:
The slope of the Security Market Line is the Beta of the stock. - correct answer ✔False
Beta measures - correct answer ✔Systematic risk
True or False:
When considering a well-diversified investor, measuring unsystematic risk is not important because we
assume that it will be diversified away. - correct answer ✔True
A stock with a low Beta would have a: - correct answer ✔Regression line with a low (relatively flat)
slope
True or False:
The Security Market Line is a graph of the CAPM equation. - correct answer ✔True
True or False:
Equilibrium exists when a stock's expected return equals its required rate of return (it lies ON the
Security Market Line). - correct answer ✔True
