Selling and efficient portfolios

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Reference no: EM1351250

1- You wish to sell short 100 shares of XYZ Corporation stock. If the last two transactions were at 34.10 followed by 34.15, you only can sell short on the next transaction at a price of :

a. 34.10 or higher.
b. 34.15 or higher.
c. 34.15 or lower.
d. 34.10 or lower.

2- Stocks A, B, and C have the same expected return and standard deviation. The following table shows the correlations between the returns on these stocks.

Stock A Stock B Stock C
Stock A _1.0
Stock B _0.9 _1.0
Stock C _0.1 _0.4 _1.0

Given these correlations, the portfolio constructed from these stocks having the lowest risk is a portfolio:

a. Equally invested in stocks A and B.
b. Equally invested in stocks A and C.
c. Equally invested in stocks B and C.
d. Totally invested in stock C.

Reference no: EM1351250

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