Who is highly risk-tolerant will have an indifference curve

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Reference no: EM131622379

1. What is the approximate 3-year average of the total return for a stock with the following year-end prices: $20, $25, $35 and $32?

a. 15.0%

b. 18.8%

c. 20.0%

d. 60.0%

2. An investor who is highly risk-tolerant will have an indifference curve that

a. is relatively steep

b. has a steep, negative slope

c. has a slight, positive slope

d. slopes downward

3. All of the following statements describe the significance of the Capital Market Line (CML) in the CAPM except:

a. the vertical intercept represents the market rate of return

b. it represents the efficient set

c. all investors will hold a portfolio lying on the CML

d. an investor's portfolio will be composed of the market portfolio combined with risk free borrowing or investing

4. An investor is able to reap abnormally high profits by analyzing a company’s most recent 52-week high and low stock prices. What form of market efficiency does this statement indicate?

a. Not even weakly efficient

b. Weak-form efficiency

c. Semi-strong efficiency

d. Strong form efficiency

5. Which of the following is true regarding the January effect?

a. The first few trading days of January display an abnormally positive return on average.

b. The January effect is largely driven by the small-cap effect.

c. On average, the month of January tends to be the worst-performing month.

d. Both a. and b. above are true.

Reference no: EM131622379

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