FINC 306 EXAM 3 UTK 100%
ACCURATE
14.25% - ANSWERStock A has an expected return of 12%, and Stock B has an
expected return of 15%. If you invest $10,000 in Stock A and $30,000 in Stock B, what
is the expected return for your portfolio?
13.5%
12%
15%
14.25%
between 0 and 1 - ANSWERWhat is the average correlation between a randomly
selected pair of U.S. stocks?
between 0 and 1
1
0
-1
False - ANSWERThink about a portfolio where $100,000 is spread equally across 10
stocks. The portfolio variance is the average of the variances of the 10 stocks.
True
False
between -1 and 0 - ANSWERWhich correlation will result in the greatest diversification
benefit?
between 0 and 1
0
between -1 and 0
market risk - ANSWERWhich is another name for systematic risk?
idiosyncratic risk
firm-specific risk
diversifiable risk
market risk
idiosyncratic risk - ANSWERWhich is another name for diversifiable risk?
systematic risk
idiosyncratic risk
market risk
ACCURATE
14.25% - ANSWERStock A has an expected return of 12%, and Stock B has an
expected return of 15%. If you invest $10,000 in Stock A and $30,000 in Stock B, what
is the expected return for your portfolio?
13.5%
12%
15%
14.25%
between 0 and 1 - ANSWERWhat is the average correlation between a randomly
selected pair of U.S. stocks?
between 0 and 1
1
0
-1
False - ANSWERThink about a portfolio where $100,000 is spread equally across 10
stocks. The portfolio variance is the average of the variances of the 10 stocks.
True
False
between -1 and 0 - ANSWERWhich correlation will result in the greatest diversification
benefit?
between 0 and 1
0
between -1 and 0
market risk - ANSWERWhich is another name for systematic risk?
idiosyncratic risk
firm-specific risk
diversifiable risk
market risk
idiosyncratic risk - ANSWERWhich is another name for diversifiable risk?
systematic risk
idiosyncratic risk
market risk
