Question 1:
The realized return on a stock portfolio is the weighted average of the expected returns on the stocks in the portfolio.
> True or False?
Question 2:
An individual stock's diversifiable risk, which is measured by its beta, can be lowered by adding more stocks to the portfolio in which the stock is held.
> True or False?
Question 3:
Lasola Corporation's stock has a 50 percent chance of producing a 25 percent return, a 30 percent chance of producing a 10% return, and a 20% chance of producing a -28% return. What is the firm's expected rate of return?
a. 9.41%
b. 9.65%
c. 9.90%
d. 10.15%
e. 10.40%
Question 4:
Vista Inc.'s stock has a 25% chance of producing a 30% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firm's expected rate of return?
a. 7.72%
b. 8.12%
c. 8.55%
d. 9.00%
e. 9.50%