Principles of Corporate Finance- Chapter 8 Exam Questions with Verified Answers Latest Update 2024 (Already Passed)
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Principles of Corporate Finance- Chapter 8
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Principles Of Corporate Finance- Chapter 8
Principles of Corporate Finance- Chapter 8 Exam Questions with Verified Answers Latest Update 2024 (Already Passed)
Who first developed portfolio theory? - Answers Harry Markowitz
Florida Company (FC) and Minnesota Company (MC) are both service companies. Their stock returns for the past three ye...
Principles of Corporate Finance- Chapter 8 Exam Questions with Verified Answers Latest Update 2024
(Already Passed)
Who first developed portfolio theory? - Answers Harry Markowitz
Florida Company (FC) and Minnesota Company (MC) are both service companies. Their stock returns for
the past three years were as follows: FC: -5 percent, 15 percent, 20 percent; MC: 8 percent, 8 percent,
20 percent. If FC and MC are combined into a portfolio with 50 percent of the funds invested in each
stock, calculate the expected return on the portfolio. - Answers 11 Percent
Florida Company (FC) and Minnesota Company (MC) are both service companies. Their stock returns for
the past three years were as follows: FC: −5 percent, 15 percent, 20 percent; MC: 8 percent, 8 percent,
20 percent. What is the variance of a portfolio with 50 percent of the funds invested in FC and 50
percent in MC? (Ignore the correction for the loss of a degree of freedom set out in the text.) - Answers
57.17
Florida Company (FC) and Minnesota Company (MC) are both service companies. Their stock returns for
the past three years were as follows: FC: −5 percent, 15 percent, 20 percent; MC: 8 percent, 8 percent,
20 percent. What is the standard deviation of a portfolio with 50 percent of the funds invested in FC and
50 percent in MC? (Ignore the correction for the loss of a degree of freedom set out in the text.) -
Answers 7.6 Percent
Investments A and B both offer an expected rate of return of 12. The standard deviation of A is 30
percent and that of B is 20 percent. If an investor wishes to invest in either A or B, then the investor
should - Answers Prefer B to A
Investments B and C both have the same standard deviation of 20 percent and have the same
correlation to the market portfolio. If the expected return on B is 15 percent and that of C is 18 percent,
then the investors would - Answers Prefer C to B
An efficient portfolio - Answers provides the highest expected return for a given level of risk and
provides the least risk for a given level of expected return.
In practice, one would generate efficient portfolios using - Answers quadratic programming
By combining lending and borrowing at the risk-free rate with efficient portfolios, we can - Answers
extend the range of investment possibilities, change the set of efficient portfolios from being curvilinear
to a straight line, and provide a higher expected return for any level of risk, except for the tangential
portfolio and the risk-free asset.
Suppose you invest equal amounts in a portfolio with an expected return of 16 percent and a standard
deviation of returns of 18 percent and a risk-free asset with an interest rate of 4 percent. Calculate the
expected return on the resulting portfolio. - Answers 10 Percent
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