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Exam (elaborations) FIN 605 (FIN605) Quiz 3 Questions & Answers.
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Quiz 3 Investors generally are considered to be a risk ___ because they expect to be compensated for assuming risk.  Averse  Seekers  Adverse  Takers Dana has a portfolio of 8 securities, each with a market value of $5,000. The current beta of the portfolio is 1.28 and the beta ...

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  • September 18, 2024
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  • 2024/2025
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Quiz 3
Investors generally are considered to be a risk ___ because they expect to be
compensated for assuming risk.
 Averse
 Seekers
 Adverse
 Takers
Dana has a portfolio of 8 securities, each with a market value of $5,000. The current
beta of the portfolio is 1.28 and the beta of the riskiest security is 1.75. Dana wishes
to reduce her portfolio beta to 1.15 by selling the riskiest security and replacing it
with another security with a lower beta. What must be the beta of the replacement
security?
 1.21
 1.62
 0.91
 0.73
Beta is defined as:
 A measure of volatility of a security’s returns relative to the returns of a
broad-based market portfolio of securities.
 The ratio of the variance of market returns to the covariance of returns on a
security with the market
 The inverse of the slop of the security regression line
 All of the above
A beta value of 0.5 for a security indicates
 The security has below-average systematic risk
 The security has average systematic risk
 The security has no unsystematic risk
 The security has above-average systematic risk
The risk-free rate of return is 5.51 percent, based on an expected inflation premium
of 2.54 percent. The expected return on the market is 12.8 percent. What is the
required rate of return for Envoy common stock which has a beta of 1.35?
 15.35%
 12.80%
 6.98%
 16.24%
An investor, by investing in combinations of stocks, develops a ____portfolio.
 Diversified
 Simple
 Energetic
 Structured


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