Portfolio Risk and Return I
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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:
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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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