Reference no: EM133114912

1.) An investment was made for $35,000 and and income of $3,000.  The ending value of the investment was $34,000. The percentage return on the investment is closest to:

a.) 5.7%

b.) 8.6%

c.) 11.8%

2.) Which of the following measures the risk per unit of return?

a.) Beta

b.) Standard Deviation

c.) Coefficient of Variation

3.) An investor creates a portfolio with two assets. He invests 60% of the portfolio in Asset A with an expected return of 10% and the remainder of the portfolio in Asset B with an expected return of 20%. The expected return on the portfolio is closest to:

a.) 14%.

b.) 15%.

c.) 16%,

4.) The greatest degree of diversification will be between assets with correlation of returns equal to:

a.) 1.

b.) 0.

c.) -1

5.) A stock has a beta of 1.4. An investors expect the return on the market to be 8% and the risk-free rate to be 3%. According to the CAPM, the expected return on the stock is closest to:

a.) 7.0%.

b.) 10.0%.

c.) 14.2%.