The Capital Asset Pricing Model Assignment
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The Capital Asset Pricing Model Assignment
Question
Question 1
The variance of Stock A is .004, the variance of the market is .007 and the covariance between the two is .0026. What is the correlation coefficient?
- .9285
- .8542
- .5010
- .4913
- .3510
2 points Save Answer
Question 2
Which one of the following is an example of systematic risk?
- the price of lumber declines sharply
- airline pilots go on strike
- the Federal Reserve increases interest rates
- a hurricane hits a tourist destination
- people become diet conscious and avoid fast food restaurants
2 points Save Answer
Question 3
According to the Capital Asset Pricing Model:
- the expected return on a security is negatively and non-linearly related to the security’s beta.
- the expected return on a security is negatively and linearly related to the security’s beta.
- the expected return on a security is positively and linearly related to the security’s variance.
- the expected return on a security is positively and non-linearly related to the security’s beta.
- the expected return on a security is positively and linearly related to the security’s beta.
2 points Save Answer
Question 4
Which one of the following would indicate a portfolio is being effectively diversified?
- an increase in the portfolio beta
- a decrease in the portfolio beta
- an increase in the portfolio rate of return
- an increase in the portfolio standard deviation
- a decrease in the portfolio standard deviation
2 points Save Answer
Question 5
Which one of the following is an example of unsystematic risk?
- the inflation rate increases unexpectedly
- the federal government lowers income taxes
- an oil tanker runs aground and spills its cargo
- interest rates decline by one-half of one percent
- the GDP rises by 2% more than anticipated
2 points Save Answer
Question 6
Diversification can effectively reduce risk. Once a portfolio is diversified, the type of risk remaining is:
- individual security risk.
- riskless security risk.
- risk related to the market portfolio.
- total standard deviations.
- None of these.
2 points Save Answer
Question 7
A portfolio contains two assets. The first asset comprises 40% of the portfolio and has a beta of 1.2. The other asset has a beta of 1.5. The portfolio beta is:
- 1.35
- 1.38
- 1.42
- 1.50
- 1.55
2 points Save Answer
Question 8
Excelsior share are currently selling for $25 each. You bought 200 shares one year ago at $24 and received dividend payments of $1.50 per share. What was your total rate of return?
- 4.17%
- 6.25%
- 10.42%
- 104.67%
- 110.42%
2 points Save Answer
Question 9
You just sold 200 shares of Langley, Inc. stock at a price of $38.75 a share. Last year you paid $41.50 a share to buy this stock. Over the course of the year, you received dividends totaling $1.64 per share. What is your capital gain on this investment?
- -$550
- -$222
- -$3
- $550
- $878
2 points Save Answer
Question 10
Over the past five years, a stock produced returns of 14%, 22%, -16%, 2%, and 10%. What is the probability that an investor in this stock will NOT lose more than 8% nor earn more than 21% in any one given year?
- 34%
- 68%
- 95%
- 99%
- 100%
2 points Save Answer
Question 11
Excelsior shares are currently selling for $25 each. You bought 200 shares one year ago at $24 and received dividend payments of $1.50 per share. What was your percentage capital gain this year?
- 4.17%
- 6.25%
- 10.42%
- 104.17%
- 110.42%
2 points Save Answer
Question 12
A symmetric, bell-shaped frequency distribution that is completely defined by its mean and standard deviation is the _____ distribution.
- gamma
- Poisson
- bi-modal
- Normal
- Uniform
2 points Save Answer
Question 13
What are the arithmetic and geometric average returns for a stock with annual returns of 21%, 8%, -32%, 41%, and 5%?
- 5.6%; 8.6%
- 5.6%; 6.3%
- 8.6%; 5.6%
- 8.6%; 8.6%
- 8.6%; 6.3%
2 points Save Answer
Question 14
The return pattern on your favorite stock has been 5%, 8%, -12%, 15%, 21% over the last five years. What has been your average return and holding period return over the last 5 years?
- 4.5%; 6.5%
- 7.4%; 38.9%
- 7.4%; 7.76%
- 7.4%; 76.73%
- None of these
2 points Save Answer
Question 15
A year ago, you purchased 300 shares of IXC Technologies, Inc. stock at a price of $9.03 per share. The stock pays an annual dividend of $.10 per share. Today, you sold all of your shares for $28.14 per share. What is your total dollar return on this investment?
- $5,703
- $5,733
- $5,753
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
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37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
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