Exam 12: Return,Risk,and the Security Market Line

Farm Tractors,Inc.,stock has a beta of 1.12 and an expected return of 12.8 percent.The risk-free rate is 3.84 percent.What is the market rate of return?

Which one of the following is expressed as "E(R_M)- R_f"?

The stock of Healthy Eating,Inc.,has a beta of 0.88.The risk-free rate is 3.8 percent and the market return is 9.6 percent.What is the expected return on Healthy Eating's stock?

The common stock of Industrial Technologies has an expected return of 12.4 percent.The market return is 9.2 percent and the risk-free return is 3.87 percent.What is the stock's beta?

Laura has one risk-free asset and one risky stock in her portfolio.The risk-free asset has an expected return of 3.2 percent.The risky asset has a beta of 1.3 and an expected return of 14.9 percent.What is the expected return on the portfolio if the portfolio beta is 0.975?

The risk-free rate is 4.1 percent,the market rate is 13.2 percent,and the expected return on a stock is 15.84 percent.What is the beta of the stock?

What is the beta of a portfolio which consists of the following?

Reed Plastics just announced the earnings per share for the quarter just ended were $.45 a share.Analysts were expecting $.51.What is the amount of the surprise portion of the announcement?

Which one of the following terms is another name for systematic risk?

The risk-free rate is 3.4 percent and the expected return on the market is 10.8 percent.Stock A has a beta of 1.18.For a given year,stock A returned 13.6 percent while the market returned 11.8 percent.The systematic portion of the unexpected return was ________ percent and the unsystematic portion was ________ percent.

According to the systematic risk principle,the reward for bearing risk is based on which one of the following types of risk?

Which one of the following terms is the measure of the tendency of two things to move or vary together?

Pat realized a total return of 11.8 percent which is less than his expected return of 12.5 percent.What is the amount of his unexpected return?

Which one of the following has the highest expected risk premium?

Retail Specialties just announced that its Chief Operating Officer is retiring at the end of this month.This announcement will cause the firm's stock price to:

Which one of the following is the best example of a risk associated with stock ownership?

Which one of the following betas represents the greatest level of systematic risk?

Which two of the following determine how sensitive a security is relative to movements in the overall market? I.the standard deviation of the security II.correlation between the security's return and the market return III.the volatility of the security relative to the market IV.the amount of unsystematic risk inherent in the security

The slope of the security market line is equal to the:

What is the covariance of security A to the market given the following information?