Exam 17: A Basic Look at Portfolio Management and Capital Market Theory

A stock with a beta of 1.9 would be most likely to be found in what industry? (Use your best judgment.)

The steeper the slope on a risk-return indifference curve, the more anxious an investor is to take risks.

According to the capital asset pricing model, it is possible to compose a portfolio with a return greater than any one on the efficient frontier, given equal risk, without borrowing funds for investment.

Markowitz's theory asserts that the slope of indifference curves is determined by the investor's indifference to various portfolios.

Points above the efficient frontier have superior risk-return characteristics to those along the efficient frontier, but are not part of the feasible set.