Principle of Finance Milestone 3 Sophia Course,100% correct
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Course
FINANCE 215 (FINANCE215)
Institution
Strayer University
Principle of Finance Milestone 3 Sophia Course 1 You invest $1,000 in a stock that has a 15% chance of a 1% return, a 60% chance of a 5% return and a 25% chance of a 7% return. What is your expected return after one year? · 4.3% · 4.9% · 4.5% · 5.3% CONCEPT Expected Return 2 Which of the follow...
Principle of Finance Milestone 3 Sophia
Principles of Finance
Milestone 3
1
Which of the following is true of portfolio diversification?
A diversified portfolio containing positively correlated investments has a higher variance than a portfolio
containing a single asset type.
A diversified portfolio containing negatively correlated investments has a lower variance than a portfolio
containing a single asset type.
A diversified portfolio containing positively correlated investments has a lower variance than a portfolio
containing a single asset type.
A diversified portfolio containing negatively correlated investments has a higher variance than a
portfolio containing a single asset type.
CONCEPT
Portfolio Considerations
2
A security that falls below the security market line has __________.
, a high expected return and a high price
a low expected return and a high price
a low expected return and a low price
a high expected return and a low price
CONCEPT
Understanding the Security Market Line
3
You own a small manufacturing business that produces widgets. You have spent $100,000 acquiring the
fixed assets you need to produce widgets. Each widget costs you $4 to make and they sell for $22 each,
so your variable cost is 18.2% of the overall revenue.
At your current level of operating leverage, how many widgets must you sell to break even?
4,546
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