risk return and capital asset pricing model

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Two alternative expected returns are compared with help of

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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
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