QUIZ: Portfolio Risk and Return I
This post lesson quiz is to help anchor what you have just learnt and to give you some practise. The questions may not be structured like the kind you are likely to get in the exam.
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Give yourself a pat for attempting this quiz! Do remember to attempt the mock exams provided by CFA Institute to prepare for the kind of questions you might get for the exam!
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Question 1 of 8
1. Question
Returns Measures
Candice bought 2 bonds at $98 each at t=0, and another bond at $102 at t=1. At t=2, she sold all 3 bonds at $99 each. At t=1 and t=2, she received a coupon of $2 per bond for each period.
The geometric mean return for each period is closest to:
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Question 2 of 8
2. Question
Returns Measures
Candice bought 2 bonds at $98 each at t=0, and another bond at $102 at t=1. At t=2, she sold all 3 bonds at $99 each. At t=1 and t=2, she received a coupon of $2 per bond for each period.
The money-weighted rate of return for each period is closest to:
CorrectIncorrect -
Question 3 of 8
3. Question
Seiko bought a mutual fund with an annual 2% management fee. He paid a 0.8% commission to his broker. After 1 year, Seiko sold the funds at a gross return of +15.3%. He was taxed 30% on the gains. His after-tax nominal returns is closest to:
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Question 4 of 8
4. Question
Expected Returns and Standard Deviation of Returns
Johnson invested in a portfolio of 60% stocks, and 40% bonds.
Expected Return Standard Deviation Stocks 14% 29% Bonds 7% 13% What is the expected return of the portfolio?
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Question 5 of 8
5. Question
Expected Returns and Standard Deviation of Returns
Johnson invested in a portfolio of 60% stocks, and 40% bonds.
Expected Return Standard Deviation Stocks 14% 29% Bonds 7% 13% If the correlation between stocks and bonds is 0.24, what is the expected standard deviation of the portfolio?
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Question 6 of 8
6. Question
Theory of Portfolio Diversification
Which of these is LEAST likely to be a portfolio on the efficient frontier?
Portfolio Expected Return Standard Deviation A 7% 14% B 9% 17% C 8% 17% CorrectIncorrect -
Question 7 of 8
7. Question
Investor’s Optimal Portfolio
Reuben is indifferent to these two portfolios:
Portfolio Expected Return Standard Deviation A 7% 14% B 6% 17% Reuben is most likely a ___________ investor.
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Question 8 of 8
8. Question
Investor’s Optimal Portfolio
An investor’s optimal portfolio is estimated to have 75% risk-free asset, and 25% risky portfolio. The expected return of the risky portfolio is 12%, with a standard deviation of returns of 23%. If the risk-free rate is 4%, what is the expected returns and standard deviation of the portfolio?
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