Determine proportion of portfolio invested in stock

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Reference no: EM1355098

1.Nico owns 100 shares of stock X which has a price of $12 per share and 200 shares of stock Y which has a price of $3 per share. What is the proportion of Nico's portfolio invested in stock X?

1. 1. 67%
2. 2. 77%
3. 3. 50%
4. 4. 33%

2.Nico wants to invest all of his money in just two assets: the risk free asset and the market portfolio. What is Nico's portfolio beta if he invests a quarter of his money in the market portfolio and the rest in the risk free asset?

1. 1. 0.75
2. 2. 0.00
3. 3. 1.00
4. 4. 0.25

3.Nico bought 100 shares of Cisco Systems stock for $24.00 per share on January 1, 2002. He received a dividend of $2.00 per share at the end of 2002 and $3.00 per share at the end of 2003. At the end of 2004, Nico collected a dividend of $4.00 per share and sold his stock for $18.00 per share. What was Nico's realized return during the three year holding period? What was Nico's compound annual rate of return?

1. 1. -16.7%; -4.4%
2. 2. +12.5%; +4.4%
3. 3. +16.7%; +4.4%
4. 4. -12.5%; -4.4%

4.Nico bought 100 shares of Cisco Systems stock for $24.00 per share on January 1, 2002. He received a dividend of $2.00 per share at the end of 2002 and $3.00 per share at the end of 2003. At the end of 2004, Nico collected a dividend of $4.00 per share and sold his stock for $18.00 per share. What was Nico's realized return during the three year holding period?

1. 1. +12.5%
2. 2. -16.7%
3. 3. +16.7%
4. 4. -12.5%

5.Since for a given increase in risk, most managers require an increase in return, they are

1. 1. risk-averse.
2. 2. risk-free.
3. 3. risk-seeking.
4. 4. risk-indifferent.

6.The beta of a portfolio is

1. 1. irrelevant, only the betas of the individual assets are important.
2. 2. is the weighted average of the betas of the individual assets in the portfolio.
3. 3. does not change over time.
4. 4. the sum of the betas of all assets in the portfolio.

7.The ________ describes the relationship between nondiversifiable risk and return for all assets.

1. 1. Gordon model
2. 2. EBIT-EPS approach to capital structure
3. 3. capital asset pricing model
4. 4. supply-demand function for assets

Reference no: EM1355098

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