# risk return and capital asset pricing model

MCQsQuestion.com has 16 Question/Answers about Topic risk return and capital asset pricing model

## Two alternative expected returns are compared with help of

- A. coefficient of variation
- B. coefficient of deviation
- C. coefficient of standard
- D. coefficient of return
- Correct Answer: Option A

## Relationship between risk and required return is classified as

- A. security market line
- B. required return line
- C. market risk line
- D. risky return line
- Correct Answer: Option A

## Market required return is subtracted from risk free rate which is used to calculate

- A. quoted risk premium
- B. market risk premium
- C. portfolio risk premium
- D. unquoted risk premium
- Correct Answer: Option B

## Treasury yielded by bond is 7% and market required return is 13% then market risk premium will be

- A. 2.16%
- B. 20%
- C. 6%
- D. 0.53%
- Correct Answer: Option C

## Type of premium asked by investors for bearing risk on average stock is classified as

- A. average premium
- B. market risk premium
- C. stock premium
- D. buying discount
- Correct Answer: Option B

## Range of probability distribution with 68.26% lies within

- A. (+ 3σ and -3σ)
- B. (+ 4σ and -4σ)
- C. (+ 1σ and -1σ)
- D. (+ 2σ and -2σ)
- Correct Answer: Option C

## Standard deviation is 18% and coefficient of variation is 1.5% an expected rate of return will be

- A. 27%
- B. 12%
- C. 19.50%
- D. none of above
- Correct Answer: Option C

## Stock with large amount of contribution of risk in a diversified portfolio is represented by

- A. high beta and standard deviation
- B. high beta, low standard deviation
- C. low beta, low standard deviation
- D. low beta, low variance
- Correct Answer: Option A

## In expected future returns, tighter probability distribution shows risk on given investment which is

- A. smaller
- B. greater
- C. less risky
- D. highly risky
- Correct Answer: Option A

## Past realized rate of return in period t is denoted by

- A. t bar r
- B. t hat r
- C. r hat t
- D. r bar t
- Correct Answer: Option D

## Beta coefficient is used to measure market risk which is an index of

- A. coefficient risk volatility
- B. market risk volatility
- C. stock market volatility
- D. portfolio market portfolio
- Correct Answer: Option C

## Required return is 11% and premium for risk is 8% then risk free return will be

- A. 3%
- B. 19%
- C. 0.72%
- D. 1.38%
- Correct Answer: Option A

## In capital asset pricing model, stock with high standard deviation tend to have

- A. low variation
- B. low beta
- C. high beta
- D. high variation
- Correct Answer: Option B

## An amount invested is $2000 and dollar return is $200 then rate of return would be

- A. 0.10%
- B. 10%
- C. $1,800
- D. $2,200
- Correct Answer: Option B

## According to probability distribution of rates of return, a close outcome to an expected value is shown by

- A. value distribution
- B. expected distribution
- C. more peaked distribution
- D. less peaked distribution
- Correct Answer: Option C