Exam 9: Characterizing Risk and Return

Dominant Portfolios Determine which one of these three portfolios dominates another. Name the dominated portfolio and the portfolio that dominates it. Portfolio Blue has an expected return of 7 percent and risk of 10 percent. The expected return and risk of portfolio Yellow are 13 percent and 17 percent, and for the Purple portfolio are 9 percent and 14 percent.

Which of the following statements is correct?

At the beginning of the month, you owned $15,500 of General Motors, $4,500 of Starbucks, and $9,000 of Nike. The monthly returns for General Motors, Starbucks, and Nike were 7.10 percent, -1.36 percent, and -0.54 percent. What is your portfolio return?

Jenna receives an investment newsletter that recommends that she invest in a stock that has doubled the return of the S&P 500 in the last two months. It also claims that this stock is a "safe bet" for the future. Which of the following statements is correct regarding this information?

This is another term for market risk.

Sprint Nextel Corp stock ended the previous year at $25.00 per share. It paid a $2.57 per share dividend last year. It ended last year at $18.89. If you owned 650 shares of Sprint, what was your dollar return and percent return?

Portfolio Return The table below shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return?

This index tracks 500 companies which allows for a great deal of diversification.

Investment Return Noble stock was $60.00 per share at the end of last year. Since then, it paid a $2.00 per share dividend last year. The stock price is currently $58. If you owned 400 shares of Noble, what was your percent return?

This is the investor's combination of securities that achieves the highest expected return for a given risk level.

Jane invests all of her money in the stock of one firm. Which one of the following statements must be true?

We commonly measure the risk-return relationship using which of the following?

Diversifying Consider the characteristics of the following three stocks:

Portfolio Weights If you own 400 shares of Air Line Inc. at $44.50, 500 shares of BuyRite at $52.90, and 100 shares of Motor City at $9.25, what are the portfolio weights of each stock?

Which of the following is correct?

Portfolio Return The table below shows your stock positions at the beginning of the year, the dividends that each stock paid during the year, and the stock prices at the end of the year. What is your portfolio percentage return?

Which of the following statements is correct with regards to diversification?

Standard Deviation The standard deviation of the past five monthly returns for PG Company are 2.75 percent, -0.75 percent, 4.15 percent, 6.29 percent, and 3.84 percent. What is the average monthly return?

Sharif's portfolio generated returns of 12%, 15%, -15%, 19% and -12% over 5 years. What was his average return over this period?

Dominant Portfolios Determine which one of these three portfolios dominates another. Name the dominated portfolio and the portfolio that dominates it. Portfolio Blue has an expected return of 14 percent and risk of 19 percent. The expected return and risk of portfolio Yellow are 15 percent and 18 percent, and for the Purple portfolio are 16 percent and 21 percent.