60.1K

Verified Solution

Link Copied!

1. Asset A is riskier than Asset B. Therefore, B is a better buy.

1. True
2. False

2. The standard deviation is a better measure between standard deviation and coefficient of variation because it consistently gives the correct answer when comparing risk between two assets.

1. True
2. False

3. Most investors are

1. Risk-neutral
2. Risk-lover
3. Risk-averse
4. All of the above

4. An investor who doesnt mind taking risk as long as he/she gets compensated for it is known as

1. Risk-neutral
2. Risk-lover
3. Risk-averse
4. Both b) and c) above

5. We need to measure the risk of an asset so that we can determine the RRR from the asset

1. True
2. False

6. Suppose you are measuring the risk of an asset in isolation. Which one(s) is(are) the suitable measuring unit?

1. Standard deviation
2. Coefficient of variation
3. Beta

d) Both a) and b)

7. Suppose you are measuring the risk of an asset in a diversified portfolio. Which one(s) is(are) the suitable measuring unit?

1. Standard deviation
2. Coefficient of variation
3. Beta
4. Both a) and b)

8. The following info is given:

P Q

K 10% 16%

7% 8.5%

Which one is riskier?

1. P
2. Q

9. A stocks expected return has the following distribution:

Demand for the Companys Products	Probability of this Demand Occurs	Rate of Return if This Demand Occurs
Weak	0.1	-50%
Below average	0.2	-5%
Average	0.4	16%
Above average	0.2	25%
Strong	0.1	60%
	1.0

Calculate the stocks expected return, standard deviation, and coefficient of variation.

10. Rf rate is 3%, Rm=10%, HCSHs beta=1.5, what return do you require from HCSH?

Answer & Explanation Solved by verified expert

See Answer