#### Details of this Paper

##### finance homework mcq eco282

**Description**

solution

**Question**

Question. Portfolio Theory;was first developed by;a. Merton;Miller;b. Richard;Brealey;c. Franco;Modigliani D. Harry Markowitz;2. The;distribution of returns, measured over a short interval of time, like daily;returns, can be approximated by;A. Normal distribution;b. Lognormal;distribution;c. Binomial;distribution;d. None of;the above;3. Florida;Company (FC) and Minnesota Company (MC) are both service companies. Their;historical return for the past three years are: FC: -5%, 15%, 20%, MC: 8%, 8%;20%. Calculate the mean of returns for each company.;a. FC: 12%;MC: 6%;B. FC: 10%, MC: 12%;c. FC: 20%;MC: 32%;d. None of;the above;4. Florida;Company (FC) and Minnesota Company (MC) are both service companies. Their;historical return for the past three years are: FC: -5%, 15%, 20%, MC: 8%, 8%;20%. Calculate the variances of return for FC and MC.;a. FC: 100;MC: 256;b. FC: 350;MC: 96;C. FC: 175 MC: 48;d. None of;the above;5. Florida;Company (FC) and Minnesota Company (MC) are both service companies. Their historical;return for the past three years are: FC: -5%, 15%, 20%, MC: 8%, 8%, 20%.;Calculate the covariance between the returns of FC and MC.;A. 60;b. 80;c. 40;d. None of;the above;58;Junjie Liu ? Econ 282 Practice;Multiple Choice;6. Florida;Company (FC) and Minnesota Company (MC) are both service companies. Their;historical return for the past three years are: FC: -5%, 15%, 20%, MC: 8%, 8%;20%. Calculate the standard deviation (S.D.) of return for FC and MC.;a. FC: 10%;MC: 12%;b. FC: 18.7%;MC: 9.8%;C. FC: 13.2% MC: 6.9%;d. None of;the above;7. Florida;Company (FC) and Minnesota Company (MC) are both service companies. Their;historical return for the past three years are: FC: -5%, 15%, 20%, MC: 8%, 8%;20%. Calculate the correlation coefficient between the return of FC and MC.;a. 0.0;b. -0.655;C. +0.655;d. None of;the above;8. Florida;Company (FC) and Minnesota Company (MC) are both service companies. Their;historical return for the past three years are: FC: -5%, 15%, 20%, MC: 8%, 8%;20%. If FC and MC are combined in a portfolio with 50% of the funds invested in;each, calculate the expected return on the portfolio.;a. 12%;b. 10%;C. 11%;d. None of;the above;9. Florida;Company (FC) and Minnesota Company (MC) are both service companies. Their;historical return for the past three years are: FC: -5%, 15%, 20%, MC: 8%, 8%;20%.What is the variance of the portfolio with 50% of the funds invested in FC;and 50% in MC (approximately)?;A. 85.75;b. 111.50;c. 55.75;d. None of;the above;10. Florida;Company (FC) and Minnesota Company (MC) are both service companies. Their historical;return for the past three years are: FC: -5%, 15%, 20%, MC: 8%, 8%, 20%. What;is the standard deviation of the portfolio with 50% of the funds invested in FC;and 50% in MC?;a. 10.6%;b. 14.4%;C. 9.3%;d. None of the above;59;Junjie Liu ? Econ 282 Practice;Multiple Choice;11. Investments;A and B both offer an expected rate of return of 12%. If the standard deviation;of A is 20% and that of B is 30%, then investors would;A. Prefer A to B;b. Prefer B;to A;c. Prefer a;portfolio of A and B;d. Cannot;answer without knowing investor's risk preferences;12. Investments;B and C both have the same standard deviation of 20%. If the expected return on;B is 15% and that of C is 18%, then the investors would;a. Prefer B;to C;B. Prefer C to B;c. Reject;both B and C;d. None of;the above;13. The;efficient portfolios: I) Have only unique risk II) Provide highest returns for;a given level of risk III) Provide the least risk for a given level of returns;IV) Have no risk at all;a. I only;B. II and III only;c. IV only;d. II only;14. By;combining lending and borrowing at the risk-free rate with the efficient;portfolios, we can I) extend the range of investment possibilities II) change;efficient set of portfolios from being curvilinear to a straight line III);provide a higher expected return for any level of risk except the tangential;portfolio;a. I only;b. I and II;only;C. I, II, and III;d. None of;the above;15. Suppose;you invest equal amounts in a portfolio with an expected return of 16% and a;standard deviation of returns of 20% and a risk-free asset with an interest;rate of 4%, calculate the expected return on the resulting portfolio;A. 10%;b. 4%;c. 12%;d. None of;the above;16. Suppose;you invest equal amounts in a portfolio with an expected return of 16% and a;standard deviation of returns of 20% and a risk-free asset with an interest;rate of 4%, calculate the standard deviation of the returns on the resulting;portfolio;a. 8%;B. 10%;c. 20%;d. None of;the above;60;Junjie Liu ? Econ 282 Practice;Multiple Choice;17. Suppose;you borrow at the risk-free rate an amount equal to your initial wealth and;invest in;a portfolio;with an expected return of 16% and a standard deviation of returns of 20%. The;risk-free asset has an interest rate of 4%, calculate the expected return on;the resulting portfolio;a. 20%;b. 32%;C. 28%;d. None of;the above;18. Suppose;you borrow at the risk-free rate an amount equal to your initial wealth and;invest in;a portfolio;with an expected return of 20% and a standard deviation of returns of 16%. The;risk-free asset has an interest rate of 4%, calculate standard deviation of the;resulting portfolio;a. 28%;b. 40% C.;32%;d. None of;the above;19. If the;covariance of Stock A with Stock B is -100, what is the covariance of Stock B;with Stock A?;a. +100;B. -100;c. 1/100;d. Need;additional information;20. The;correlation measures the;a. Rate of;movements of the return of individual stocks;b. Direction;of movement of the return of individual stocks C. Direction of movement between;the returns of two stocks;d. Stock;market volatility;21. If the;correlation coefficient between Stock A and Stock B is +0.6, what is the;correlation between Stock B with Stock A?;A. +0.6;b. -0.6;c. +0.4;d. -0.4;22. The;correlation between the efficient portfolio and the risk-free asset is;a. +1;b. -1;C. 0;d. Cannot be calculated;61;Junjie Liu ? Econ 282 Practice;Multiple Choice;23. In the presence of a risk- free asset, the investor's;job is to: I) invest in the market portfolio II) find an interior portfolio;using quadratic programming III) borrow or lend at the risk-free rate IV) read;and understand Markowitz's portfolio theory;a. I and II;only B. I and III only;c. II and;IV only;d. IV only;24. Sharpe;ratio is defined as: A. (rP - rf)/?P;b. (rP - rM;/?P;c. (rP - rf;/?P;d. None of;the above

Paper#48885 | Written in 18-Jul-2015

Price :*$18*