What are some common characteristics of the market portfolio theory?

Oct 4th, 2015
Price: $5 USD

Question description

1. True or False  If two investments offer the same expected return, most investors would prefer the one with higher variance. 

2. True or False  Portfolios that offer the highest expected return for a given variance or standard deviation are known as efficient portfolios. 

3  True or False  Investors are mainly concerned with those risks that can be eliminated through diversification. 

4.  True or False  Beta measures the marginal contribution of a stock to the risk of a well-diversified portfolio. 

5  True or False  According to CAPM, all investments plot along the security market line. 

6.  True or False  Tests of CAPM have confirmed that Capital Asset Pricing Model holds good under all circumstances. 

7  True or False  Both the CAPM and the APT stress that expected return is not affected by unique, nonsystematic, or firm specific risk. 

8. True or False  All portfolios on the efficient frontier are efficient portfolios. 

9   True or False  When we introduce borrowing and lending at the risk-free rate with the market portfolio much of the efficient frontier is now inefficient. 

10  True or False  The Market portfolio is a risky portfolio that has the average risk for the economy. The beta of this portfolio is one and we typically use a market-index to represent this portfolio in practice.

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(Top Tutor) mickeygabz
School: Cornell University

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