Exam 11: Systematic Risk and the Equity Risk Premium

The volatility of Home Depot share prices is 30% and that of General Motors shares is 30%.When I hold both stocks in my portfolio and the stocks' returns have a correlation of 1,the overall volatility of returns of the portfolio is:

A stock market comprises 1000 shares of stock A and 3000 shares of stock B.The share prices for stocks A and B are $25 and $30,respectively.What is the capitalization of the market portfolio?

Barrick Gold Corp stock has a beta of 2.1.If the risk-free rate is 2.6%,and expected market return is 9%,what is the expected return of Barrick Gold Corp stock,according to the CAPM?

The market portfolio is the portfolio of all risky investments held:

A portfolio comprises two stocks,A and B,with equal amounts of money invested in each.If stock A's stock price increases and that of stock B decreases,the weight of stock A in the portfolio will increase.

A portfolio has three stocks - 100 shares of Yahoo (YHOO),200 Shares of General Motors (GM),and 50 shares of Standard and Poor's Index Fund (SPY).If the price of YHOO is $20,the price of GM is $20,and the price of SPY is $130,calculate the portfolio weight of YHOO and GM.

A stock market comprises 5000 shares of stock A and 2000 shares of stock B.Assume the share prices for stocks A and B are $20 and $35,respectively.What is the capitalization of the market portfolio?

Your portfolio contains $12,000 of BMO stock,which has a beta of 1.1,and $18,000 of Lululemon stock,which has a beta of 1.4.What is the beta of your portfolio?

Use the table for the question(s)below. Consider the following expected returns,volatilities,and correlations: -The expected return of a portfolio that consists of a long position of $10,000 in Wal-Mart and a short position of $2000 in Microsoft is closest to:

How does the S&P/TSX Composite index rank in terms of number and market capitalization of Canadian public firms?

When the returns of two stocks are negatively correlated,but not perfectly negatively correlated,then:

Your investment portfolio contains 100 shares of RBC,75 shares of TD,and 200 shares of WestJet.The price of RBC is currently $75 per share,the price of TD is $55 and the price of WestJet is currently $21 per share.If you expect the return on RBC to be 5% in the next year,the return on TD to be 6.5%,and the return on WestJet to be 10%,what is the expected return for your portfolio?

The volatility of your investment is closest to:

Use the table for the question(s)below. Consider the following expected returns,volatilities,and correlations: -The volatility of a portfolio that is equally invested in Wal-Mart and Microsoft is closest to:

Use the table for the question(s)below. Consider the following returns: -The volatility on Home Depot's returns is closest to:

The beta of the market portfolio is:

Why should an investor invest in a negative-beta stock knowing that it will have an expected return lower than the risk-free rate?

Air Canada stock has a standard deviation of 25%,while the market index standard deviation is 12%.If the correlation between Air Canada and the market index is 0.33,what is the beta of Air Canada stock?

The volatility of Home Depot Share prices is 30% and that of General Motors shares is 30%.When I hold both stocks in my portfolio and the stocks returns have zero correlation,the overall volatility of returns of the portfolio is:

You observe the following scatterplot of Ford's weekly returns against the S&P 500.Which of the following statements is TRUE about Ford's beta against the S&P 500?